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US House Democratic coalition creates AI working group

Representative Derek Kilmer will chair the Artificial Intelligence Working Group, which is aimed at introducing “sensible, bipartisan” policies for AI technology.

Democrats from the United States House of Representatives have formed a working group on artificial intelligence aimed at introducing new legislation around the nascent tech sector.

The 97-member New Democrat Coalition announced its AI working group on Aug. 15, stating it would work with President Joe Biden’s administration, stakeholders and lawmakers from both sides of the political arena to develop “sensible, bipartisan policies to address this emerging technology.”

The group will focus on a range of issues including how best to leverage AI for growth while still ensuring that workers who stand to lose their jobs as a result of AI can remain employed.

Representative Derek Kilmer will serve as chair of the AI working group and told CNBC the primary focus of the working group was to crack down on the spread of misinformation and aired concerns on advanced AI-generated deepfakes becoming increasingly prevalent online.

“There’s real concern about the potential for AI generated disinformation, real concern about misuse of advanced AI models.”

“That’s the type of thing that requires Congress to get smart and get smart fast,” Kilmer added.

Related: Pentagon forms ‘Task Force Lima’ to map generative AI for US defense

Lawmakers, academics and top tech CEOs have all signaled the need to reign in on the potential dangers raised by AI.

In May, Vice President Kamala Harris, along with Biden’s top advisers, held a meeting with several AI industry CEOs to discuss concerns about the risks associated with AI.

In June, President Biden held a meeting with experts in AI in Silicon Valley to discuss a similar subject.

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Additional reporting by Felix Ng.

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Pentagon forms ‘Task Force Lima’ to map generative AI for US defense

Task Force Lima will look into how artificial intelligence can be used across the U.S. defense, including warfighting capabilities.

The United States Pentagon has launched a new task force to look into how generative artificial intelligence can be used for the nation’s defense.

On Aug. 10, the Pentagon announced the formation of “Task Force Lima” which would look into integrating AI across the U.S. defense apparatus so it can “design, deploy, and use generative AI technologies.”

In a statement, the Department of Defense said the aim is to use AI to enhance its business affairs, health, readiness, policy and warfighting capabilities.

Deputy Secretary of Defense Dr. Kathleen Hicks said part of Lima’s mission would also study how the department can defend against and respond to malicious or adversarial uses of AI.

The newly formed Chief Digital and Artificial Intelligence Office (CDAO) — which launched in June 2022 — will lead the new task force, with U.S. Navy Captain Manuel Xavier Lugo named Lima’s mission commander.

Lima’s creation comes as tensions between the U.S. and China over AI technology continue to heighten.

Related: Pentagon is testing whether AI can plan response to an all-out war

On Aug. 9 President Joe Biden signed an executive order that named China, Hong Kong and Macau as countries of concern and tech investments in those regions would be would regulated and restricted.

Such tech investments — deemed critical for China’s military, intelligence and cyber capabilities — included semiconductors which are often vital for developing AI models.

The order adds to restrictions on AI chip sales to China that Biden implemented in October 2022 and U.S. officials are mulling tighter controls on such sales.

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Biden administration launches AI cybersecurity challenge to ‘protect Americans’

With an allocation of nearly $20 million in rewards, the AI Cyber Challenge brings together prominent AI enterprises such as Anthropic, Google, Microsoft, and OpenAI.

The Biden administration revealed an opportunity on August 9, for hackers to vie for substantial monetary rewards through the application of artificial intelligence (AI) in safeguarding vital United States infrastructure from cybersecurity vulnerabilities.

In spring, a preliminary phase will select up to 20 high-performing teams for DEF CON 2024's semifinals. Of these, a maximum of five teams will earn $2 million each and move on to DEF CON 2025's finals. The top three teams will vie for extra prizes, including a $4 million award for the best safeguarding of vital software, as stated in an official press release.

With an allocation of nearly $20 million in rewards, the AI Cyber Challenge brings together prominent AI enterprises such as Anthropic, Google, Microsoft, and OpenAI. These industry leaders will contribute their technology to the competition, which was unveiled during the Black Hat U.S.A. hacking conference held in Las Vegas.

Screenshot of the AI Cyber Challenge press release.  Source: The White House

Participants will be requested to publicly share the inner workings of their systems, enabling broader utilization of their solutions. Additionally, guidance for the challenge is provided by the Open Source Security Foundation, a division of the Linux Foundation.

The organizing body of the competition, the Defense Advanced Research Projects Agency (DARPA), has committed to offering financial support of up to $1 million to seven small enterprises aiming to join the competition, thus ensuring a diverse range of participants.

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The use of hacking competitions to foster innovation is not a new approach for the government. Back in 2014, DARPA initiated the Cyber Grand Challenge, aimed at creating an open-source automated defense system capable of safeguarding computers against cyber threats. The present two-year challenge follows a comparable framework to this prior initiative.

The contest shows that there are official efforts to deal with a new threat that experts are working to fully understand. In the past year, several U.S. companies have created different AI tools, like ChatGPT, that let users make realistic videos, images, texts and code.

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Two more crypto bills in the US: Law Decoded, July 17–24

Last week was marked by two new legislative initiatives for the crypto industry in the United States.

Last week was marked by two new legislative initiatives for the crypto industry in the United States. Senator Jack Reed sponsored a bipartisan bill that would tighten Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations and sanctions requirements for decentralized finance (DeFi). The bill would subject DeFi operations to the same requirements as “other financial companies, including centralized crypto trading platforms, casinos, and even pawn shops.” 

Two major crypto lobbying groups slammed the legislation: Coin Center and the Blockchain Association. The former released separate statements describing the legislation as a “messy,” “unworkable” and “unconstitutional” way of regulating DeFi. Kristin Smith, the CEO of the Blockchain Association, echoed Coin Center’s concerns and described the new legislation as redundant. Smith said federal law enforcement agencies already have the tools and expertise to combat this “relatively small but important issue.”

Republican House Agriculture and House Financial Services Committee members introduced the Financial Innovation and Technology for the 21st Century Act. The bill gives the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities, clarifies the authority of the Securities and Exchange Commission (SEC), and creates a process for digital assets deemed initially securities to be sold as commodities. Representatives French Hill and Dusty Johnson, who are among the bill’s cosponsors, sent a letter to SEC Chair Gary Gensler a day before the bill’s introduction criticizing the agency’s so-called “regulation by enforcement” of the crypto industry.

Multiple spot crypto ETF applications go to Federal Register

Spot Bitcoin exchange-traded fund (ETF) applications from several firms have been published in the Federal Register, moving them one step along in the SEC process. The Federal Register received notices of proposed rule changes allowing Bitcoin ETF applications from BlackRock, Fidelity, Invesco Galaxy, VanEck and WisdomTree. Publishing the applications in the official journal of the U.S. government gives the SEC a window of opportunity to accept or reject the request, extend the time allowed or open the application for public comment.

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Kuwait bans crypto and virtual asset transactions

The state of Kuwait is the latest jurisdiction to ban virtually all operations involving cryptocurrencies like Bitcoin (BTC). Kuwait’s main financial regulator, the Capital Markets Authority (CMA), issued a circular on the supervision and issuance of virtual assets in the country. In the circular, the CMA confirmed the commitment to “absolute prohibition” on major use cases and operations involving cryptocurrencies, including payments, investments and mining. The circular also bans local regulators from issuing licenses allowing firms to provide virtual asset services as a commercial business.

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Marathon shareholders file lawsuit against company’s top management

U.S.-based crypto mining company Marathon Digital is heading to court after its shareholders alleged that its CEO Fred Thiel, alongside other top executives, breached fiduciary duties, unjustly enriched themselves and wasted corporate assets. According to the legal team, the company’s management has been downplaying its problems, artificially inflating Marathon’s valuation, receiving excessive compensation, making lucrative insider sales, and receiving unjustifiably elevated bonuses based on false and misleading statements.

The shareholders aim to correct the company’s governance by strengthening the board’s supervision of operations, nominating at least four candidates from shareholders to the board and eliminating the previous procedure of directors’ elections.

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AI companies commit to safe and transparent AI, White House reports

The Biden Administration emphasized the responsibility of these companies in ensuring the safety of their products.

The White House announced on July 21, that prominent artificial intelligence (AI) companies, such as OpenAI, Google and Microsoft, have made commitments to create AI technology that is safe, secure and transparent. Additionally, the White House acknowledged other companies like Amazon, Anthropic, Meta and Inflection for also committing to AI safety.

The Biden Administration emphasized the responsibility of these companies in ensuring the safety of their products. The goal is to harness AI's potential while promoting the highest standards in its development.

Kent Walker, Google's President of Global Affairs, acknowledged that achieving success in AI requires collaboration. He expressed satisfaction in joining other leading AI companies to support these commitments and assured that they will continue to work together by sharing information and best practices.

Screenshot of the White house statement release. Source: White House

Among the commitments are pre-release security testing for AI systems, sharing best practices in AI safety, investing in cybersecurity and insider threat safeguards and enabling third-party reporting of vulnerabilities in AI systems. Anna Makanju, OpenAI's VP of Global Affairs, stated that policymakers worldwide are contemplating new regulations for advanced AI systems.

In June, bipartisan U.S. lawmakers introduced a bill to create an AI commission, addressing concerns in the rapidly growing industry. The Biden Administration says it is collaborating with global partners like Australia, Canada, France, Germany, India, Israel, Italy, Japan, Nigeria, the Philippines and the UK to establish an international framework for AI.

According to Microsoft President Brad Smith, the company is endorsing all of President Biden's voluntary commitments and independently committing to additional practices that align with these crucial objectives. By doing so, Microsoft aims to expand its safe and responsible AI practices and collaborate with other industry leaders.

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Global leaders, including the United Nations Secretary-General, have expressed concerns about the potential misuse of generative AI and deepfake technology in conflict zones. In May, the Biden administration met with AI leaders to establish the groundwork for ethical AI development and announced a significant $140 million investment in AI research and development by the National Science Foundation.

The administration emphasized that these immediate commitments by the companies highlight the essential principles of safety, security and trust, signifying a crucial step towards the responsible development of AI.

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Robert F. Kennedy Jr. invested up to $250,000 in Bitcoin after Miami’s conference

The recent investment disclosure contrasts with his claims in May that he was not an investor in Bitcoin.

Democratic presidential candidate Robert F. Kennedy Jr. owns up to $250,000 in Bitcoin (BTC), in contrast to his previous claim that he was not an investor in the leading cryptocurrency.

A record obtained by CNBC shows Kennedy Jr. owned between $100,001 and $250,000 worth of Bitcoin at the end of June. The investment was made after his speech at the Bitcoin 2023 conference in May, when he announced that his campaign would be the first to accept Bitcoin donations in the United States.

During the conference, the candidate also denied investing in Bitcoin. “I am not an investor, and I am not here to give investment advice,” he stated.

The financial disclosure filed on June 30 does not specify when the cryptocurrency was purchased, only that it has returned less than $201 since the investment was made. The filing does not indicate who made the purchase in the Kennedy family, although the candidate's campaign acknowledged it was Kennedy Jr.

Screenshot of Robert F. Kennedy Jr.'s financial disclosure filed on June 30. Source: CNBC

Challenging President Joe Biden, Kennedy Jr. has targeted the crypto community in his campaign. In a Twitter post on May 3, he stated that “cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine," adding that it was a mistake for the U.S. government "to hobble the industry and drive innovation elsewhere."

Among his wealthy backers is Twitter founder and the Block Inc. CEO Jack Dorsey, who has recently thrown his weight behind the candidate. “He can and will,” wrote Dorsey on Twitter about the candidate's strategy to defeat his opponents in the upcoming race.

Kennedy Jr. is the son of former Attorney General and Senator Robert F. Kennedy, as well as the nephew of the 35th President of the U.S. John F. Kennedy. His support comes at a crucial time for the American crypto industry, as the Securities and Exchange Commission (SEC) is cracking down on crypto businesses in the absence of a proper regulatory framework for digital assets in the U.S.

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Governor Ron DeSantis Signs Bill Prohibiting Use of Central Bank Digital Currencies in Florida

Governor Ron DeSantis Signs Bill Prohibiting Use of Central Bank Digital Currencies in FloridaOn Friday Florida’s governor Ron DeSantis signed legislation that bans the use of a central bank digital currency (CBDC) in the state. Following the bill SB 7054 being signed into law, Florida’s Uniform Commercial Code (UCC) now explicitly forbids the use of a federally adopted CBDC as money. Florida Puts the Brakes on CBDCs The […]

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President Biden announces nominations for key positions at Federal Reserve

Leadership at the Fed will likely have an impact on how the U.S. government handles the potential issuance of a central bank digital currency.

United States President Joe Biden has announced his nomination of two people for key positions on the Federal Reserve, including a new Fed governor and economist Philip Jefferson as vice chair.

In a May 12 notice from the White House, President Biden said he would put forward Fed governor Philip Jefferson’s name to become the next vice chair of the central bank, replacing Lael Brainard, who resigned in February. The U.S. President added that Adriana Kugler, a former chief economist for the U.S. Department of Labor, was his pick for one of the Fed Board of Governors’ empty seats. He will also be renominating Fed governor Lisa Cook for a full term.

“These nominees understand that this job is not a partisan one, but one that plays a critical role in pursuing maximum employment, maintaining price stability, and supervising many of our nation’s financial institutions,” said President Biden.

The nominations will move to Congress, where a full Senate vote is required before the candidates take their respective positions at the Fed. Though the Democrats hold a slim majority in the Senate, partisanship could still be a factor in moving Biden’s picks forward. In a May 12 statement, House Financial Services Committee chair Patrick McHenry — a Republican — described the nominees as “seasoned economists” and said lawmakers would hold them to account in considering their positions.

If confirmed by the Senate, Jefferson would serve as Fed vice chair as part of his existing term as governor until 2036 and Kugler for a 14-year term likely ending in 2037. Cook’s current term is expected to end in 2024 should she not receive congressional confirmation.

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Leadership at the Federal Reserve will likely impact how the U.S. government considers treating crypto and blockchain, particularly in the potential issuance of a central bank digital currency. Though proponents of a federally issued CBDC have suggested it could help reinforce the U.S. dollar’s status as the world’s reserve currency, some have attacked a digital dollar over privacy concerns.

In Florida, Governor Ron DeSantis signed a ban on CBDCs in the state, claiming that the technology was about “surveilling Americans and controlling behavior of Americans.” North Carolina’s House of Representatives passed a similar bill on May 3 prohibiting CBDC payments and not allowing the Fed to include the state in any digital dollar pilot.

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Argentina says no to crypto payments, France tolerates ‘finfluencers’: Law Decoded, May 1–8

Argentina’s central bank banned payment providers from offering crypto transactions, adding that it intends to reduce the country’s payment-system exposure to digital assets.

Last week brought several significant international developments in regulation. Argentina’s central bank banned payment providers from offering crypto transactions, adding that it intends to reduce the country’s payment-system exposure to digital assets. While local payment providers refuse to comment on the decision, Argentina’s fintech chamber urged the government to reconsider, claiming that “it limits access to a technology that offers multiple benefits and opportunities for our society.”

In France, the Senate Committee on Economic Affairs approved an amendment allowing registered cryptocurrency companies to hire social media influencers for advertising and promotional purposes. The new wording would allow companies registered with France’s Financial Markets Authority to hire product influencers.

Meanwhile, Nigeria is preparing new industry regulations for digital asset platforms. The Nigerian Securities and Exchange Commission (SEC) is considering allowing licensed digital exchanges to list tokens backed by specific assets, including equity, debt and property. The SEC also aims to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers and tokenized coins issuers. The authority will not register crypto exchanges until the central bank provides clear regulations for the crypto market.

White House to build international standards for DLT

The United States Government released the national standards strategy for key and emerging technologies, with blockchain being one of them. The national strategy suggests that distributed ledger technology (DLT) and digital infrastructure would increasingly impact and be widely used in the economic sector. Some key areas where these technologies will be actively tested include automated and connected infrastructure, such as smart communities and the Internet of Things. DLT can be especially useful in building cybersecurity and privacy-based features and services.

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North Carolina House passes bill banning CBDC payments to the state

The North Carolina House of Representatives has unanimously passed legislation prohibiting payments to the U.S. state using a central bank digital currency (CBDC). The latest version of the legislation aims to prohibit individuals from using CBDCs for any payments to the state. It also bars the Federal Reserve from using North Carolina as a potential testing ground for its own CBDC pilot. The bill will now move to the Senate, where it must pass before being signed into law or vetoed by Governor Roy Cooper. 

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Montana governor signs pro-cryptocurrency mining bill into law

Montana Governor Greg Gianforte has signed a bill into law essentially preventing local governments in the state from passing laws prohibiting cryptocurrency mining. The legislation effectively enshrines crypto miners’ rights in the state by revising existing laws, prohibiting discriminatory electrical rates for mining firms and not allowing taxation for crypto used as a payment method. It was introduced partly as a preventive measure in response to certain proposals in other states.

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White House to build international standards for DLT

The White House national strategy listed eight emerging technologies with a focus on building international standards and finding use cases in the economic sector.

The United States White House released the national standards strategy for key and emerging technologies on May 4. The national strategy identified eight technology sectors that will have a great economic impact in the near future.

Among the eight technologies that focus on artificial intelligence, communication and network technologies, biotechnology, semiconductors and more, the listing of distributed ledger technology (DLT) and digital identity infrastructure grabbed the crypto community’s attention the most.

DLT permits concurrent access, record validation, and record updating throughout a networked database. Blockchain technology is based on DLT, making it possible for users to see any changes and the people who made them, lowering the need for auditing data, ensuring data reliability, and restricting access to only those who actually need it.

The national strategy aims to increase U.S. leadership in the development of international standards for these emerging technologies. The American government is actively involved in building synergies with the private sector to promote and build international standards for such emerging technologies.

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The most prominent example of such collaboration and standard development includes the telecom and communications standard development. For example, the initial proposal for 3G was made in the 1990s by Qualcomm Technologies, and the subsequent proposal for LTE, the dominant standard for wireless broadband communication for mobile devices and data terminals, was made in the 2000s by NTT Docomo, a major Japanese mobile phone provider.

The national strategy suggests the likes of DLT and digital infrastructure would increasingly impact and be widely used in the economic sector. Some of the key areas where these technologies will be actively tested include automated and connected infrastructure, such as smart communities and the Internet of Things (IoT). DLT can especially find great use in building cybersecurity and privacy-based features and services.

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