In September 2022, United States President Joe Biden signed an executive order establishing guidance around developing and regulating artificial intelligence technology. While focused on promoting innovation leadership balanced against reducing harms, directives with bipartisan support may increase oversight on cryptocurrency.
Summary Background on Order
Titled "Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government", the Biden Administration outlined goals accelerating accountable AI across sectors:
- Promote development of "trustworthy” AI systems emphasizing fairness, transparency, safety and privacy
- Monitor and investigate harmful algorithmic discrimination influencing livelihoods
- Spotlight and address barriers discouraging underserved communities adopting modern technologies
While focusing broadly on algorithmic accountability and mitigating biases, decentralized cryptocurrencies emerged conspicuously spotlighted given growing mainstream relevance aftermarket turmoil and distress shook trust.
Why Crypto Faces Increased AI Scrutiny
Although not called out directly as primary targets, cryptographic assets rely extensively on mathematically intensive systems where accountability suffers transparency gaps:
- Sophisticated algorithms govern blockchain operations and economics
- Cryptosynthetics and lending carry systemic risks akin to complex derivatives
- Anonymity and global reach limit protective jurisdiction
As such, desire bringing guardrails and stability around AI innately envelops crypto - even before considering vulnerabilities like front-running, scamming, manipulation or terra-like financial weapons threatening consumers.
Regulatory pressures look inevitable absent proves proactivity addressing identified weak points. Thus Biden's executive order serves warning shot across bow signaling closer oversight looms.
Early Reactions from Crypto Industry Leaders
In response to emerging spotlight from the Biden Administration around ensuring algorithmic systems prove sufficiently trustworthy, several crypto thought leaders chimed early reactions across social media:
"This was only matter of time as AI/ML revolution and crypto collide in financial realm with huge open questions."Balaji Srinivasan, former CTO Coinbase
"I worry paternalist interventions in early phase technology risk unintended dampening innovation but share spirit optimizing for social welfare."Vitalik Buterin, co-founder Ethereum
"BTC protocol architecture foundationally resilient against disruption from AI progress or interference from geopolitics - My greatest long-term conviction."Michael Saylor, MicroStrategy CEO
So a mixture of acceptance and objections meet paternalistic moves with consensus around anticipating heightened attention.
Prudent Precautions for Crypto Investors
While knee jerk regulatory reactions historically overreach stifling technological progress, smart investors hedge risks around policy shifts impacting assets like cryptocurrencies:
- Temper return expectations lower anticipating volatility from political meddling
- Seek jurisdictional diversity in holdings mitigating single regime influence
- Prioritize protocols emphasizing transparency and ethics compliance
- Monitor litigation and enforcement actions for fast-moving rule changes
- Maintain flexible outlooks on positions if fundamental rules reshape
However optimism persists around the crypto industry emphasizing collaboration alongside compromise to meet reasonable standards balancing innovation that cuts-edge systems like AI enable.
Conclusion
In summary President Biden's executive order on artificial intelligence promoting accountability and ethical practices flags a concerted priority scrutinizing cryptocurrencies as architects of the future. While well-intentioned helping protect consumers from potential downside risks, the likelihood of paternalist overreach stifling exponentially impactful innovations endures real.
Investors face advisable caution hedging portfolios against fickle regulatory whims that historically overcorrected when disruptive technologies emerge. But room for optimism holds that cooler heads from both policy and technology spheres ultimately prevail - aligning balanced guardrails securing welfare without restraining revolution.