It was a disastrous week for cryptocurrency in the United States, as the SEC filed suit against the two biggest exchanges, Binance and Coinbase, on a theory that makes it nearly impossible to run a cryptocurrency exchange in the US that is competitive with overseas exchanges. Nick Weaver lays out the difference between securities "process crimes" and "crime crimes," and how it helps to distinguish the two lawsuits. The SEC action marks the end of an uneasy truce between regulators and the cryptocurrency industry, but not the end of the debate. Both exchanges have the funds for a hundred-million-dollar criminal defense and lobbying campaign. So you can expect to hear more about this issue for years (and years) to come.
I bring up two AI regulation stories. First is Mark Andreessen's post trying to head off AI regulation, which is pretty persuasive until the end, where he says that the risk of bad people using AI for bad things can be addressed by using AI to stop them. Sorry, Mark, it doesn't work that way. We aren't, for example, stopping the crimes that modern encryption makes possible by throwing more crypto at the culprits.
My nominee for the AI Regulation Hall of Fame, though, goes to Japan, which has decided to address the phony issue of AI copyright infringement by declaring that it's a phony issue and there'll be no copyright liability for their AI industry if it trains its models on copyrighted content. That's the right answer, in my view, but it's also a brilliant way of borrowing and subverting the EU's GDPR model, in which aggressively regulating global data transfers turns out to be a pretty good trade barrier. Now Japan proposes to write the global copyright rules for AI, at least as a practical matter. Why? Because Japan's policy effectively gives immunity from copyright claims to any AI company that builds a dataset or trains its models in Japan. The rest of the world can follow suit or watch their industries flock to Japan to train their models in relative regulatory certainty. This has to be the smartest piece of international AI regulation any jurisdiction has come up with so far. (It helps, of course, that copyright claims against AI are mostly rent-seeking by Big Content.)
