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Asia faces ‘costly paradox’ over divergent AI rules in US and EU

Asia faces ‘costly paradox’ over divergent AI rules in US and EU
Asian technology firms are facing a “costly paradox” as they try to navigate an increasingly uneven global AI rule book, with divergent compliance requirements in the European Union and the United States threatening to blunt their competitive edge.
Analysts say the challenge is acute for Asian companies. While the EU has a single, comprehensive and legally binding artificial intelligence framework based on the landmark EU AI Act, US technology-related laws are decentralised at the state level.

For firms building AI systems, compliance with regulations is essential to earning consumer trust, avoiding potentially crippling penalties and ensuring they can continue operating in two of the world’s largest consumer markets.

Asian firms embedded in the global AI ecosystem face dual costs to comply with different EU and US rules, according to Martyna Sucharzewska, a senior technology analyst at BMI, a unit of Fitch Solutions.

“Organisations operating across both jurisdictions must build parallel compliance architectures, and the cost of doing so is not trivial,” she said.

The implications are significant because Asian tech firms play critical roles in the AI space, ranging from semiconductor and memory chips makers from Taiwan and South Korea to cloud infrastructure developers.

Asian countries were aligning their AI rules with the EU’s governance-led model or the American innovation-based approach or adopting elements of both, Sucharzewska said.

Singapore followed a voluntary and principles-based approach closer to the US model to build its governance framework for agentic AI, or autonomous AI, while South Korea’s AI Basic Act was aligned with the EU legal framework, she said.

This fragmentation in AI governance has arisen due to the absence of a global consensus on the technology, a divide that is accelerating, according to Sucharzewska.

A Fitch report released last week on global AI regulation says the Gulf Cooperation Council – comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – follows a light-touch governance model and has emerged as an alternative to the EU’s “prescriptive approach”.

While the Middle East was increasingly being seen as an important region for AI adoption, the biggest challenge for Asian companies was meeting the “dual compliance” requirements of the EU and the US and different market demands, said Anndy Lian, a Singapore-based adviser to governments on blockchain and information technology.

Consequently, these companies had to bear the burden of a “regulatory fragmentation tax” and a “costly paradox”, Lian said.

“This friction splits Asian research and development down the middle. Instead of focusing capital on core model breakthroughs, Asian start-ups must bleed resources into engineering hyper-localised” solutions for compliance, he added.

Raj Kapoor, president of the India Blockchain Alliance, said that navigating divergent rule books was imposing a disproportionate burden on Asian companies, many of which were creators of AI-enabled products as well as major consumers of Western AI technology.

Lian said that apart from hurting competitiveness, “the danger is that Asian AI plans will become structurally fractured, building Balkanised versions of the same technology to satisfy Western regulators”.

According to Lian, some Asian countries are leaning towards the US approach. Prioritising “ironclad guardrails” through regulations, such as in the EU, over developing technological capability was “an expensive luxury they cannot afford”, he said.

“The core of the dilemma is that Asia relies heavily on the US for bleeding-edge AI infrastructure, yet looks to Europe as a massive consumer market for its digitised products and services,” Lian said.

The implications of regulatory compliance would have a broader economic impact beyond technology, said Raj Kapoor, president of the India Blockchain Alliance.

The World Economic Forum (WEF) said in November that the next phase of Southeast Asia’s digital economy would be powered by AI across all sectors.

“Alongside physical infrastructure, robust AI regulation and governance frameworks are paramount. These policies must strike a careful balance: encouraging innovation while establishing clear ethical guidelines to build and maintain the necessary consumer trust,” the WEF said.

According to a McKinsey report released in February, 46 per cent of Southeast Asian businesses have moved beyond the pilot phase of AI adoption, surpassing the global average of 35 per cent.

The choice of regional countries in adopting the US or the EU AI regulatory framework would ultimately reflect their geopolitical stance within the global tech nexus.

“For Asian governments, selecting a regulatory framework is rapidly evolving from a technical policy decision into a defining geopolitical statement, one that may determine not only economic opportunity but also their place in the architecture of the future digital world,” Kapoor said.

 

Source: https://www.scmp.com/week-asia/economics/article/3355327/asia-faces-costly-paradox-over-divergent-ai-rules-us-and-eu?module=perpetual_scroll_0&pgtype=article

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Global sentiment lifts off: The US-EU agreement’s ripple through stocks, commodities, and digital currencies

Global sentiment lifts off: The US-EU agreement’s ripple through stocks, commodities, and digital currencies

The announcement of a US-EU trade agreement on Sunday has acted as a catalyst, easing tensions that had previously weighed on investor confidence. This development has had a ripple effect across various markets, influencing equities, bonds, commodities, and cryptocurrencies.

As we approach a week marked by high-stakes economic events and corporate earnings, understanding these dynamics becomes increasingly crucial. In my view, the renewed optimism is a welcome change, though the mixed signals in some markets suggest that caution remains warranted.

Let me tell you more.

A boost from the US-EU trade agreement

The US-EU trade agreement has emerged as a pivotal factor in lifting global risk sentiment. For months, trade uncertainty had cast a shadow over markets, with investors wary of escalating tariffs and disruptions to global supply chains.

The deal announced on Sunday has alleviated some of these concerns, fostering a more risk-on environment. Investors are now more inclined to allocate capital to growth-oriented assets like stocks, rather than seeking refuge in traditional safe havens like bonds or gold.

This shift reflects a broader belief that economic stability might be within reach, at least in the short term. However, with major events like the Federal Open Market Committee meeting and US payroll data looming, the sustainability of this optimism remains an open question.

US markets: Choppy trading and rising yields

In the United States, stock markets closed mixed after a volatile session, capturing the complexity of the current environment. The S&P 500 inched up by 0.02 per cent, signalling modest gains, while the NASDAQ climbed 0.33 per cent, driven by strength in technology stocks.

Meanwhile, the Dow Jones Industrial Average dipped by 0.14 per cent, hinting at lingering caution among traders. This uneven performance suggests that while the trade agreement has bolstered confidence, investors are still grappling with uncertainties tied to upcoming economic releases and corporate earnings.

US Treasury yields, which often serve as a barometer of market sentiment, edged higher across the curve. The 10-year Treasury yield rose by 2.2 basis points to 4.410 per cent, and the two-year yield ticked up by 0.2 basis points to 3.926 per cent.

These increases suggest that investors are shifting away from the safety of government bonds, aligning with the broader risk-on sentiment. Higher yields also reflect expectations of stronger economic growth, though they could pressure equity valuations if the trend accelerates.

The US Dollar Index, a measure of the dollar’s strength against major currencies, advanced by 1.01 per cent. A stronger dollar typically accompanies periods of economic optimism, as it did here, fuelled by the trade deal and improving risk appetite. This dollar rally could pose challenges for US exporters, but it also underscores the market’s faith in the resilience of the US economy.

Commodities: Diverging paths for gold and brent crude

Commodities have displayed divergent trends amid the shifting sentiment. Gold, a classic safe-haven asset, extended its retreat, falling by 0.68 per cent to US$3,315 per ounce.

This decline is understandable in the context of a rising risk appetite, as investors reduce their holdings of gold in favor of assets with higher potential returns. I see this as a natural response to the trade agreement, though gold could regain favor if new uncertainties emerge.

In contrast, Brent crude oil surged by 1.9 per cent to US$70 per barrel, propelled by President Trump’s proposal to impose secondary tariffs on nations purchasing Russian oil ahead of a 50-day deadline. This move has raised concerns about a tighter oil supply, which is expected to boost prices.

The rally also reflects the improving global economic outlook, which tends to lift energy demand. The energy market remains vulnerable to geopolitical shifts, and any escalation in trade disputes could alter this trajectory.

Asian markets and US futures: A mixed outlook

Asian stock markets mirrored the uneven performance seen in the US, with Japan’s Nikkei 225 pulling back by 1.1 per cent. This decline likely stemmed from profit-taking after recent gains, though it highlights that not all regions are fully embracing the risk-on wave. Despite this, US equity index futures suggest that US stocks will open higher, pointing to sustained positive momentum.

Investors are now fixated on a packed week ahead, featuring the FOMC meeting, US ISM manufacturing data, non-farm payrolls, second-quarter GDP figures, and earnings from four of the “Magnificent Seven” tech giants. These events will likely determine whether the current optimism persists or wanes.

Cryptocurrencies: Ethereum’s surge and Bitcoin’s mining milestone

The cryptocurrency market has also captured attention, with Ethereum briefly topping US$3,900, its highest level since December, before pulling back. This surge underscores growing investor enthusiasm for Ethereum, driven by its expanding role in decentralised finance and smart contract applications.

Bernstein analysts have noted that Ethereum treasuries, companies holding Ethereum as a reserve asset, are adopting a distinct approach compared to their Bitcoin-focused counterparts. These treasuries generate staking rewards, providing a yield on their holdings, which marks a significant evolution in how institutions utilise cryptocurrencies.

The analysts caution that this model introduces liquidity and security risks. Staking contracts, while generally liquid, can require days-long queues to unstake, forcing Ethereum treasuries to balance availability with yield optimisation. More advanced strategies, such as restaking or DeFi-based yield generation, further complicate matters by exposing firms to vulnerabilities in smart contracts.

This trade-off between yield and risk highlights the maturing nature of the crypto market, where innovation often comes with growing pains. Companies will need to navigate these challenges carefully to sustain Ethereum’s momentum.

Bitcoin, meanwhile, has seen its mining power approach a new record, with the 7-day average hashrate reaching 942 exahashes per second. This figure sits just below the all-time high of 943.6 exahashes per second set in mid-June, according to data from Blockchain.com.

The hashrate, which tracks the total computing power dedicated to mining Bitcoin, offers insight into the network’s security and the confidence of miners. The recent surge suggests that miners remain bullish on Bitcoin’s long-term prospects, despite its price cooling off in recent weeks.

This increase in mining power has persisted despite a new all-time high in Bitcoin’s difficulty, which adjusts to make mining more challenging as more power is added. Miners’ willingness to expand operations under these conditions reflects their belief in future price gains, likely driven by Bitcoin’s historical resilience and growing institutional adoption.

I find this development encouraging, as it signals a robust foundation for Bitcoin, though it also raises questions about energy consumption and profitability if prices stagnate.

My perspective: Optimism tempered by caution

From my standpoint, the advance in global risk sentiment is a positive development, particularly after months of trade-related uncertainty. The US-EU agreement has provided a much-needed lift, and its effects are evident across equities, currencies, and commodities.

The strength in the US dollar and Brent crude, coupled with Ethereum’s price surge and Bitcoin’s mining milestone, paints a picture of a market eager to move forward. Yet, the mixed performance of US and Asian stock markets, along with gold’s decline, reminds us that not all investors are thoroughly convinced.

The week ahead will be crucial in determining whether this momentum is sustained. The FOMC meeting could signal shifts in monetary policy, while economic data, such as payrolls and GDP, will shed light on the health of the US economy. Earnings from tech giants will also play a role, given their outsized influence on market indices.

In my opinion, the current risk-on environment offers opportunities, but investors should remain vigilant. The cryptocurrency space, with its blend of innovation and risk, exemplifies this duality. Ethereum treasuries and Bitcoin miners are pushing boundaries, yet they face hurdles that could temper their progress.

 

Source: https://e27.co/global-sentiment-lifts-off-the-us-eu-agreements-ripple-through-stocks-commodities-and-digital-currencies-20250729/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

US-Japan deal, EU talks, and Japan’s Bitcoin bet: A new chapter for global finance

US-Japan deal, EU talks, and Japan’s Bitcoin bet: A new chapter for global finance

The global economy is buzzing with some pretty exciting developments. I will explore what’s happening with the US-Japan trade agreement, the whispers of a US-EU deal, the possibility of a Bank of Japan rate hike, and even a Japanese company’s bold leap into Bitcoin.

I’ll break it all down for you in a way that’s easy to follow, and throw in some of my thoughts.

The US-Japan trade deal: Easing tensions, boosting confidence

First up, let’s talk about the US-Japan trade deal that’s been making headlines. This agreement is a big deal, literally and figuratively. The US has agreed to slash its planned tariffs on Japanese goods from a steep 25 per cent down to a more reasonable 15 per cent, and that includes autos, which are a massive part of Japan’s export economy.

Imagine you’re a Japanese automaker – Toyota, Honda, Nissan, take your pick. This news is like a breath of fresh air. Lower tariffs mean your cars can roll into the US market more competitively, potentially boosting sales and giving your bottom line a nice lift.

For the US, this deal isn’t just about letting more Japanese cars in. It’s likely tied to some reciprocal benefits, like Japan agreeing to buy more American goods or invest in US projects. Think of it as a two-way street: Japan gets better market access, and the US might see more jobs or economic activity as a result. What I love about this is how it shows that diplomacy can still work in a world that’s often felt like a trade-war standoff. After years of tariff threats and uncertainty, this feels like a step toward stability.

Now, here’s where it gets really interesting. The easing of these trade tensions has markets buzzing about what the Bank of Japan might do next. For ages, Japan’s central bank has kept interest rates at rock bottom – we’re talking zero or near-zero levels – to jumpstart its economy.

But with trade pressures easing, there’s talk of a possible rate hike in 2025. That’s a huge shift! A rate hike would signal that Japan’s economy is finally finding its footing, which could strengthen the yen. On the flip side, it might make life trickier for Japanese exporters if their goods get pricier abroad. It’s a bold move if it happens, and I’m rooting for Japan to pull it off without rocking the boat too much.

US-EU tariff talks: Could this be round two?

While the US-Japan deal is grabbing the spotlight, there’s another story brewing across the Atlantic. Reports are swirling that the US might be closing in on a similar 15 per cent tariff agreement with the European Union. Picture this as a sequel to the Japan deal – same vibe, different players.

If it goes through, it’d mean lower tariffs on European goods coming into the US, possibly paired with European investment flowing back the other way. The Euro Stoxx 50, a key European stock index, jumped 1.0 per cent on the news, indicating that investors are already getting excited about the possibilities.

If the US can strike deals with both Japan and the EU, it’s like hitting the trifecta of trade diplomacy. Less tension with major partners could mean smoother sailing for global trade, which has been choppy lately. I think this could be a game-changer, not just for the economies involved but for the whole world.

Fewer trade barriers often lead to more growth, and who doesn’t want that? The catch is, we’re still waiting to see if this deal sticks – the August 1 deadline for reciprocal tariffs is looming, so the clock’s ticking.

Markets are loving it: A global rally unfolds

Okay, let’s check in on how the markets are reacting, because they’re not sitting still. In the US, stocks surged after the trade news broke. The S&P 500 climbed 0.78 per cent to a record 6,309.62, the Dow Jones surged 1.14 per cent, and even the tech-heavy NASDAQ edged up 0.61 per cent to 20,892.69, despite a slight dip later. That’s a solid rally, showing investors are feeling good about where things are headed.

It’s not just a US party, though. Over in Asia, the MSCI Asia ex Japan index shot up 1.4 per cent, and the HSCEI, which tracks Chinese stocks in Hong Kong, hit its highest close since October 2021. That’s a big deal – it’s like the optimism is contagious, spreading across borders and lifting spirits everywhere. I see this as a sign that when big economies play nice, everyone benefits. Today’s early trading in Asia was a bit mixed, and US futures hint at a choppy open, but the overall vibe is… Pretty upbeat.

Then there’s the bond market. US Treasury yields ticked up, with the 10-year yield rising five basis points to 4.38 per cent and the two-year yield hitting 3.88 per cent. Higher yields typically indicate that investors expect stronger growth or perhaps a bit more inflation in the future.

To me, this ties back to the trade deals – less uncertainty could mean a healthier economy, and that’s pushing yields up as people ditch safe bets for riskier plays. The US Dollar Index dipped 0.18 per cent, and gold slid 1.3 per cent, which backs that up. When safe-haven demand softens, it’s a clue that folks are feeling bolder.

Crypto’s wild ride: Greed, gains, and a breather

Now, let’s switch gears to the crypto market, because it’s been a wild ride over there too. Bitcoin and altcoins, such as Ethereum and XRP, have been on a tear lately, racking up massive gains over the past few weeks. It’s the kind of run that gets crypto fans hyped – and honestly, I get it.

Something is thrilling about watching digital assets soar. But today, the charts are showing a sea of red candles for most of the top 100 coins by market cap. After testing some significant resistance levels, it appears that the bulls are taking a breather.

Don’t let that fool you into thinking the party’s over, though. The Fear & Greed Index, which measures crypto sentiment, is sitting at 70 – firmly in greed territory and the highest since July 12. That suggests to me that this pullback might simply be profit-taking after an explosive stretch, rather than a full-on reversal.

I’ve seen this before in crypto: big runs often hit a pause before the next leg up. So, while the traditional markets are riding trade-deal optimism, crypto’s doing its own thing – cooling off but still brimming with bullish energy.

Kitabo’s Bitcoin bet: A Japanese twist

Speaking of crypto, here’s a curveball from Japan that caught my eye. Kitabo Co., Ltd, a company that makes synthetic fiber spun yarns and trades on the Tokyo Stock Exchange, just announced it’s jumping into Bitcoin.

They’re planning to buy ¥800 million – that’s about US$5.4 million – worth of BTC using dollar-cost averaging, where you spread out purchases over time to smooth out price swings. This isn’t just a random punt; Kitabo’s been bleeding cash, losing ¥115.6 million (US$785,000) in fiscal 2024, and they’re hoping Bitcoin can help turn things around.

I find this fascinating. Kitabo’s joining a growing club of Asian companies using Bitcoin as a treasury asset – think of it as a hedge against a weakening yen or a way to diversify when traditional options aren’t cutting it. They’re even calling this their full-scale entry into crypto and real-world asset businesses, which sounds ambitious for a yarn maker!

My take is that it’s a smart, if gutsy, move. Dollar-cost averaging reduces the risk of buying at a peak, and if Bitcoin continues to climb, it could be a lifeline for a struggling firm. Additionally, it’s another indication that crypto’s going mainstream, even in unexpected areas.

What do you think? Excited for what’s next? I know I am!

 

Source: https://e27.co/us-japan-deal-eu-talks-and-japans-bitcoin-bet-a-new-chapter-for-global-finance-20250724/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j