Balancing the scales: Why Crypto and AI both need urgent oversight

Balancing the scales: Why Crypto and AI both need urgent oversight

Technology has a way of moving faster than the rules meant to govern it, and nowhere is this more evident than in the parallel rise of cryptocurrency and artificial intelligence (AI). As someone who has spent years reporting on the intersection of innovation, finance, and policy, I’ve seen firsthand how these two forces have reshaped the global landscape. For a long time, I was convinced that cryptocurrency was the most pressing issue regulators needed to tackle. Its decentralized nature, its potential for misuse, and its volatile markets seemed to demand immediate action. But as AI has surged forward—especially with the recent emergence of AI agents capable of making independent decisions—my perspective has shifted.

Both crypto and AI are moving at breakneck speed, and both need urgent attention. However, if I had to prioritise, I’d argue that AI now poses the greater challenge. Its ability to influence critical processes, blur ethical lines, and even disrupt the crypto sector itself makes it a more complex and immediate concern. We’re in a regulatory race, and the consequences of falling behind could be profound.

Need for crypto regulation hasn’t diminished

Let’s start with cryptocurrency, which has long been a lightning rod for debate. When Bitcoin first gained traction over a decade ago, it was hailed as a revolutionary alternative to traditional finance, but it also raised red flags for regulators. The anonymity of blockchain transactions, the wild price swings, and the potential for cryptocurrencies to be used in illegal activities like money laundering made it a regulatory nightmare. I remember the frenzy of 2017, when Initial Coin Offerings (ICOs) were popping up everywhere, raising billions of dollars with little to no oversight. It was a wake-up call for governments and financial watchdogs. The Financial Action Task Force (FATF) stepped in with guidelines to curb illicit uses of crypto, and countries like the U.S. and those in the European Union started working on laws to regulate exchanges and wallet providers. Yet, even now, the global regulatory landscape for crypto remains uneven. Based on what I have seen, I believe that only about half of the jurisdictions surveyed had robust crypto regulations in place, leaving plenty of room for risks to fester.

The need for crypto regulation hasn’t diminished. With the total market value of cryptocurrencies hitting $3.1 trillion in early February 2025, according to CoinMarketCap, digital assets are no longer a niche interest—they’re a significant part of the financial ecosystem. The rise of decentralised finance (DeFi), where users can lend, borrow, and trade without traditional intermediaries, has only added to the complexity. These platforms are innovative, no doubt, but they often operate in a murky legal space, with little protection for users if things go wrong. The collapse of FTX in 2022, which wiped out $8 billion in investor funds, was a stark reminder of what can happen when oversight fails to keep pace with innovation.

And while regulators like the U.S. Securities and Exchange Commission (SEC) and the European Securities and Markets Authority (ESMA) have started cracking down, the global patchwork of rules still leaves too many gaps. In my course of advisory work, the feedback I got was that many cross-border crypto transactions happen in regions with weak or no regulations, raising the stakes for financial stability and crime prevention.

The rapid ascent of AI agents

But as significant as these issues are, they’ve been overshadowed by the rapid ascent of AI. When I first started covering AI, it was mostly seen as a tool for improving efficiency—think predictive analytics or targeted advertising. That’s changed dramatically in just a few years. Today’s AI systems, especially generative models like GPT-4 and autonomous AI agents, aren’t just tools; they’re decision-makers. In finance, for example, AI is now managing portfolios, executing trades, and even approving loans, tasks that used to require human expertise. Based on my opinion and how fast AI is being adopted, AI could handle up to 30% or even 40% of all financial transactions by 2030. That’s a massive shift, and it raises serious questions about accountability and risk. Who is responsible when an AI agent makes a bad call? How do we ensure these systems are transparent and fair? And what happens when they make decisions at a scale and speed humans can’t easily oversee?

The financial sector isn’t the only area feeling the impact of AI’s rapid growth, but it’s a prime example of the challenges we face. AI agents are now deeply embedded in trading, using vast amounts of data to spot trends and make split-second decisions. This has raised concerns about market stability. The European Central Bank (ECB) cautioned in 2024 that AI-driven trading could lead to sudden market crashes if algorithms converge on the same strategies or amplify volatility. And when you bring AI into the crypto world, the risks multiply. AI is already being used to optimise trading strategies, detect fraud, and even govern decentralised organizations. But as a recent social media post pointed out, the use of AI in crypto smart contracts could open the door to exploitation if these systems aren’t carefully designed. Regulators are only beginning to grapple with these issues, and the pace of change isn’t slowing down.

Our regulatory systems are struggling to keep up

Another area where AI poses unique challenges is intellectual property. Generative AI can produce content—text, images, music—in seconds, but who owns the result? In finance, AI-generated reports and analyses are becoming standard, but the legal status of that content is far from clear. There are cases where AI developers are using copyrighted financial data to train models, and the cases are still unresolved. I did a survey in my private group consisting of business owners and more than 70% of them who were using AI for content creation were unsure about the legal implications. This uncertainty is even more pronounced in crypto, where AI-generated content is often used to promote new tokens or sway market sentiment, sometimes without any disclosure of AI involvement. These gray areas aren’t just legal headaches; they’re potential breeding grounds for abuse.

Looking at the current state of play, it’s clear to me that our regulatory systems are struggling to keep up. Crypto regulation has made some progress—think of the EU’s Markets in Crypto-Assets (MiCA) framework or the SEC’s efforts to classify certain tokens as securities—but it’s still a fragmented effort. AI regulation, on the other hand, is even further behind. The EU’s AI Act, passed in 2024, is a step in the right direction, categorising AI systems by risk level and setting stricter rules for high-risk applications. But even this groundbreaking law has been criticised for not fully addressing the global nature of AI development or the specific challenges posed by AI agents.

AI needs to take precedence

So, where should regulators focus their energy? In my view, AI needs to take precedence, not because crypto’s challenges are insignificant, but because AI’s implications are broader and more profound. Crypto’s risks—volatility, fraud, regulatory gaps—are serious, but they’re largely confined to finance. AI, by contrast, has the potential to reshape every facet of society, from healthcare to education to governance. Its ability to amplify risks within crypto, such as through AI-driven trading bots or flawed smart contracts, only underscores the need for a comprehensive approach.

This isn’t to say crypto should be ignored. The lessons we’ve learned from trying to regulate digital assets—such as the need for consumer protections and international cooperation—can and should inform AI regulation. But AI’s unique challenges, from ethical concerns to systemic risks, demand a level of urgency and innovation that we haven’t yet seen. Regulators need to act quickly, establishing clear rules for AI-driven decision-making and ensuring these systems are transparent and accountable. This will require not just technical expertise but also collaboration across borders and sectors. Initiatives like the UK Financial Conduct Authority’s Digital Sandbox, which uses synthetic data to test AI applications, are a good start, but they need to be scaled up and adopted globally.

Ultimately, the regulatory race between crypto and AI isn’t about choosing one over the other; it’s about recognising the unique risks each poses and responding accordingly. Both are transformative technologies with the power to reshape our world, for better or worse. But as AI continues to accelerate, its potential to disrupt decision-making, challenge ethical norms, and even destabilise systems like crypto makes it the more immediate priority. We can’t afford to wait. The future of finance, technology, and society depends on getting this right, and the clock is ticking.

 

 

Source: https://ciosea.economictimes.indiatimes.com/blog/balancing-the-scales-why-crypto-and-ai-both-need-urgent-oversight/118572627

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”.

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Singapore scales digital currency regulations as MAS gets additional power

Singapore scales digital currency regulations as MAS gets additional power

Singapore is stepping up its efforts to regulate the domestic digital currency industry, this time targeting firms that are based in the country but offering their services outside the city-state.

Last week, lawmakers in Singapore approved the Financial Services and Markets Bill 2022, which further expanded the jurisdiction of the Monetary Authority of Singapore (MAS), the country’s de facto central bank and digital currency regulator. The law covers virtual asset service providers (VASPs) who in digital currencies, exchanges, and firms that offer financial advice on the sale of such currencies and tokens.

Under the previous regulatory regime, the MAS only had authority over VASPs, which were based in the country and offered their services locally. This led to some regulatory loopholes in which a firm could claim to be regulated by the MAS, which is a reputable watchdog globally, but not be directly supervised by the regulator.

Alvin Tan, a board member of the MAS who spoke on behalf of Senior Minister Tharman Shanmugaratnam, said that the regulator was worried about the reputational risk that the loophole presented.

“Digital token service providers could easily structure their businesses to evade regulation in any one jurisdiction, as they operate mainly online. We could be exposed to reputational risks brought by DT service providers created in Singapore, and which provide services relating to virtual assets such as Bitcoin outside Singapore,” Tan said.

The new law was well received by some who believe that it will make the industry more reputable and further increase protections for investors. Legitimate firms operating within the confines of the law have nothing to fear, the law’s supporters say.

One of them is Anndy Lian, the chairman of Dutch exchange BigONE, who deems the new regulations reasonable.

“If you walk the ground hard enough, you will see many bad actors and dubious crypto companies using Singapore as a base of their operations. We need to properly regulate things so that the bad actors won’t affect this industry’s image,” Lian said, speaking to Nikkei Asia.

There are others who don’t support the new law, which they claim is just another burden being piled on by regulators on a nascent industry that could prove fatal to its growth.

“Sad, disappointed—we went 10 steps backwards. So MAS is making the assumption that the license is like gold—that everyone will want to get it?” One member of a digital currency group in the city-state stated.

There are also concerns related to the MAS’ processing of licensing applications. As CoinGeek reported in December, the MAS received about 180 applications for licenses by VASPs. Of these, 103 were either rejected or the applicants had withdrawn them after realizing they had not met the standards. At the time, only three firms had been granted operating licenses, with 70 applications being in consideration.

This long queue of applications was just with local firms that target the Singaporean market. VASPS will take longer to get licensed in the city-state with the new law. This will require some firms to move out of Singapore or dig deeper into their pockets to get through the scrutiny.

“For companies that are unable to fulfill the AML/CFT requirement, they will need to move out to other countries. But with more governments regulating cryptocurrency in different jurisdictions, these companies will soon find it hard to operate,” Desmond Yong, the chief strategy officer at Digital Treasures Center, commented.

This new MAS crackdown piles onto others, such as a ban on digital currency ads in public places, which kicked off in January, and the shutdown of digital currency ATMs.

 

Original Source: https://coingeek.com/singapore-scales-digital-currency-regulations-as-mas-gets-additional-power/

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”.

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