Law Decoded: EU’s AI Act, Stablecoin Regulations and US Mining Tax

The European Parliament has given its final approval to the EU AI Act, making it one of the most comprehensive AI regulations in the world. The bill will undergo a second vote in April and is expected to be published in the Official Journal of the European Union in May. The law categorizes machine learning models into four groups based on the risk they pose, with high-risk models subject to the strictest rules. High-risk applications include critical infrastructures, educational and vocational training, safety components of products, essential public and private services, law enforcement activities, migration and border control management, and administration of justice and democratic processes.

EU financial regulators are seeking to introduce more guidelines for stablecoin regulation under the Markets in Crypto-Assets Regulations (MiCA) framework. These guidelines will focus on addressing complaints related to stablecoin issuers. The European Banking Authority has already published Regulatory Technical Standards (RTS) outlining the procedures and standards for managing complaints effectively. The goal is to ensure transparency and accountability in the stablecoin market.

In the United States, President Joe Biden has proposed a 30% tax on electricity used by cryptocurrency miners as part of his administration’s budget proposal for 2025. If implemented, crypto mining companies would need to report the amount and type of electricity they use, as well as the value of externally purchased electricity. Miners who lease computational capacity would also be required to report the value of the electricity provided by the leasing company. The tax would be phased in over three years, starting at 10% in the first year, 20% in the second year, and reaching 30% in the third year.

The government of Nigeria is pressuring the cryptocurrency exchange Binance to disclose information about its top 100 users in the country. Nigerian authorities have also requested Binance’s transaction history for the past six months. In response to the government’s demands, two senior Binance executives have been detained by local prosecutors. The exchange had already delisted all naira transactions and stopped peer-to-peer naira transactions in late February. The opinions within the local crypto community are divided, with some supporting the government’s actions and others disagreeing.

The Dubai International Financial Centre (DIFC) has introduced a comprehensive digital asset law. The DIFC, a special economic zone, has its own legal system based on English law. The new law aims to update existing regulations to accommodate digital assets and electronic records. The details of the law amending previous legislation are not currently available online.

Democratic Party Senators in the United States are urging the Securities and Exchange Commission (SEC) to refrain from approving any more cryptocurrency exchange-traded funds (ETFs). They argue that allowing further approvals would expose investors to markets that are prone to fraud and manipulation. Currently, eight proposed spot Ether ETF applications are awaiting SEC approval, with hopes that other altcoins may follow suit. These senators believe that the market for Bitcoin, which has recently been approved for ETFs, is more established and scrutinized compared to smaller cryptocurrencies.