Lawmakers vs. the SEC vs. Binance: Law Decoded, June 12–19

SEC Rejects Plan to Seize Binance.US’s Assets

Once more, the United States Securities and Exchange Commission (SEC) was the talk of the week. Its plan to seize all of Binance.US’s assets was rejected by U.S. district court Judge Amy Berman Jackson, who suggested that the regulator and the crypto exchange come to an agreement together.

The agreement that was reached outlines measures for Binance.US to ensure that no Binance officials can gain access to the private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. In addition, the American cryptocurrency trading platform will provide comprehensive details about business expenses, including estimates, in the near future.

SEC Chair Gary Gensler’s 2018 Speech Resurfaces

Documents that were made public last week confirmed that in 2018, SEC personnel were worried that a statement made by one of their top officials, Bill Hinman, could weaken the notion that Ether is a security. Additionally, a video from 2018 of the current SEC Chair Gary Gensler has recently resurfaced, which is not helping his reputation. During a 2018 speech at an event organized by Bloomberg for institutional investors, Gensler confidently declared: “The majority of the crypto market is comprised of Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). I named those four because they are not securities.”

Gensler’s near future looks to be a difficult one, as Representative Warren Davidson has proposed the SEC Stabilization Act to the U.S. House of Representatives. A key element of the bill is to remove the “tyrannical Chairman” – a role Gensler currently holds. However, history suggests that Congress might not find it an easy task to oust the SEC’s chair.

HKMA Urges Major Banks to Support Crypto Firms

The Hong Kong Monetary Authority (HKMA), acting as the region’s central bank and regulator, has allegedly urged major banks like HSBC and Standard Chartered to accept crypto exchanges as customers. The HKMA sent out a circular to banking institutions to remain alert to new market trends and take a more progressive stance towards new industries such as the crypto market. Specifically, the HKMA asked the institutions to support the access of banking services to “virtual asset service providers” (i.e. crypto firms).

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European Parliament Adopts EU Artificial Intelligence Act

The European Parliament has adopted the EU Artificial Intelligence Act, a comprehensive legislative framework for governing and monitoring artificial intelligence (AI) technologies in the European Union. When the act is put into effect, certain types of AI services and products will be prohibited while others will be restricted or limited. Biometric surveillance, social scoring systems, predictive policing, emotion recognition, and untargeted facial recognition systems are some of the technologies that will be completely prohibited. Generative AI models, like OpenAI’s ChatGPT and Google’s Bard, may be used under the condition that their outputs are labeled as being AI-generated.

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Senators Propose Legislation to Revoke AI Companies’ Exemptions

Senators Josh Hawley and Richard Blumenthal have proposed legislation to revoke the special exemptions that AI companies receive under the Communications Decency Act of 1996 (CDA) from online computer services providers.

Section 230 of the CDA provides a safeguard for online service providers from being held accountable for content posted by users. It also shields them from legal action for unlawful material, as long as reasonable attempts are made to take down the content when it is found. Nevertheless, it is presently uncertain if Section 230 applies to generative AI entities such as OpenAI and Google.

At a recent Senate hearing, Sam Altman, CEO of OpenAI, informed Senator Lindsey Graham that it did not appear as though Section 230 applied to his firm. When Senator Josh Hawley inquired about what Altman thought of the idea of Congress “opening the courthouse doors” and allowing those affected by AI to testify in court, the CEO replied, “Forgive my lack of knowledge; can’t people already sue us?”

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