🚀The Bulletin #39: Biden's Push for AI Regulation, Upheavals in the Bond Market, and... is Crypto Financing Terrorism?
In this week's bulletin -- President Biden's first concerted effort at AI regulation, what upheavals in the bond market mean for you, and calls for more regulation around terror-financing via crypto.
Hey everyone! Hope you all enjoyed the warm weather☀️and had a great halloweekend👻. Stay dry amid the drizzles this week! I’m so bummed that it seems like we’re headed towards a colder November :(
Enjoy the bulletin!
🤖Biden’s Push for AI Regulation
President Biden is poised to issue an executive order focusing on the realm of artificial intelligence (AI), marking his first concerted effort to regulate the development of AI technologies by U.S. companies and bolster the supervision thereof. The forthcoming order's primary objective is to establish robust standards for American businesses and public agencies, with the aim of positioning the United States as a global leader in the oversight of the rapidly expanding AI landscape.
Under this executive order, President Biden will invoke the Defense Production Act, a mechanism empowering the President to mobilize domestic industries in support of national defense. Companies involved in the development of AI that poses potential threats to national security, economic security, or public health and safety will be required to notify the government when training their AI systems. The most advanced AI products will undergo rigorous testing to ensure they cannot be leveraged for malicious purposes, with their findings to be shared with the government.
Moreover, the order will recommend that AI-generated content be appropriately labeled to mitigate the spread of "deep fakes" and disinformation, a matter of substantial concern, especially in anticipation of the forthcoming elections.
The executive order will also urge federal agencies to bolster their enforcement measures. The White House is expected to call upon the Federal Trade Commission (FTC) to take on a more active role in safeguarding consumer interests and addressing antitrust violations in the AI sector. This proactive stance on AI regulation has garnered support from tech industry representatives who see it as a pivotal foundation for AI policy, particularly in the absence of congressional consensus.
It is worth noting that on a global scale, a race is underway to establish regulations for AI. The European Union is striving to enact AI regulations by year-end, while the Group of 7 nations is working on a code of conduct for AI companies. China has recently introduced its own regulatory framework. Some AI industry leaders are advocating for a global governance structure, inspired by the Intergovernmental Panel on Climate Change.
In June 2024, the British government will host an international summit on AI safety, marking the first major meeting of world leaders and tech executives on this subject. Notable attendees include Vice President Kamala Harris, and representatives from major tech giants such as Microsoft, Google, OpenAI, and Meta.
This executive order and the global scramble to govern AI emphasize the increasing importance of AI regulation and safety on the international stage. We look forward to more updates and insights on this evolving landscape.
📈Upheavals in the Bond Market, and What That Means For You
In a significant development, global bond market yields are on the rise after years of low interest rates. Last week, the yield on the 10-year Treasury note briefly exceeded 5 percent, a level not seen since the 2008 financial crisis.
This surge in bond yields has far-reaching consequences for the economy and financial markets. Here’s what it means for you:
Consumer Loans: As bond rates impact consumer loan rates, mortgages, car loans, and credit card rates may increase.
Economic Behavior: Higher interest rates can potentially affect consumer and corporate behavior, possibly slowing down economic growth.
Inflation: The rise in rates may help combat inflation, a key concern for the Federal Reserve.
Investor Decisions: With safer returns available in bonds, some investors might shift away from stocks.
Dollar Strength: Higher rates could further strengthen the U.S. dollar, impacting trade and global economic stability.
Federal Reserve policymakers are closely monitoring the bond market. They are expected to hold the federal funds rate steady in the next meeting to manage the tightening financial conditions caused by higher long-term rates.
The bond market may not be glamorous, but it plays a crucial role in government financing. With the U.S. government deficit growing rapidly, it must keep auctioning more debt. The market's reaction to this demand can influence economic policies, as it has done in the past. We are watching with anticipation, as upheavals the bond market continues to influence our financial landscape.
🚨Is Crypto Financing Terrorism?
The US government plans to take action against cryptocurrency firms that do not prevent terrorist groups from using cryptocurrencies to move money. This move is being led by Senator Elizabeth Warren and members of Congress, who have called for stricter regulations in response to growing concerns about the use of cryptocurrencies by terrorist organizations.
The current debate centers on the extent to which cryptocurrency contributes to terrorism financing, with the Senators citing a report that terror groups Hamas and Palestinian Islamic Jihad raised more than $130 million in crypto in recent years. Interestingly, Elliptic, the firm that contributed to the report, countered the Senators in a blog post this week that there was “no evidence to suggest that crypto fund-raising has raised anything close to” the figure cited, and that some of the money included in the total number might have gone to small crypto brokers sometimes designated as terrorist organizations for their role in financing. Nevertheless, this refutation has been dismissed by Senator Warren as an overt minimization of crypto’s role in terror-financing, driven by the interests of crypto lobbyists.
Cryptocurrency has been touted as the perfect financing tool for terror organisations because it is anonymous, borderless, and moves through intermediaries that operate in regulatory gray spaces. However, it is also worth mentioning that there are characteristics of crypto that make it less appealing to terrorists. For instance, cryptocurrencies are tracked on open digital ledgers that can be used to expose the donors of terror groups. As described by a former C.I.A. counterterrorism analyst, a terrorist crypto crowdfunding campaign “is like putting your bank account number on the internet and telling people ‘donate to Hamas here.’”
Regardless whether the figures cited in the reports are accurate, it remains a fact that digital currencies are a part of the financing picture for terrorists. We welcome measures and legislation to address cryptocurrency-related terror financing, and believe that this is a reckoning that has been a long time coming.
🍔 What we are Consuming in Venture
This podcast with Andrew Huberman, featuring Marc Andreessen, on risk-taking, innovation and AI
This tweet (do we still call them tweets?) by Paul Graham on the importance of problem-solving in the present, instead of dwelling on the past.
This conversation with Brett Adcock on how he nearly went bankrupt after his +$100m exit from Vettery (now Hired). How? By betting everything on the next big idea. And he’s doing it again today with Figure.ai, a robotics company bringing a general purpose humanoid to life.
This book, "Walk Through Fire: A Memoir of Love, Loss, and Triumph" by Shiela Johnson, the cofounder of BET and first African American woman billionaire. She recounts a deeply personal journey through love and loss, tragedy and triumph—an inspiring story of overcoming toxic influences, discovering her true self, and at last finding happiness in her work and life. It includes details of how BET got started and exited and a ton of important (and sometimes heavy) life and leadership lessons.
That’s it for this week, feel free to email me at zyn_yee_ang@brown.edu with any inquiries!
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