Tag: Regulation & Policy

Regulator Seeks Blockchain Surveillance System for Crypto Market Oversight

Kenya’s securities regulator is looking to acquire a blockchain surveillance system to oversee the nation’s rapidly expanding cryptocurrency market, as it prepares to license and supervise virtual asset firms under new legislation.

The Capital Markets Authority (CMA) is seeking an advanced blockchain analytics platform to monitor digital asset transactions, investigate suspicious activities, and ensure compliance, according to tender documents obtained by Capital FM Africa. The proposed system would track Bitcoin, Ethereum, and at least 20 other blockchains, offering both real-time and retrospective analysis.

The platform is expected to generate automated alerts for high-risk wallets, significant transfers, coin mixers, darknet-linked addresses, and sanctioned entities. It will also screen transactions against sanctions lists from the United Nations and the U.S. Office of Foreign Assets Control. Furthermore, the system would map relationships between wallets, reconstruct transaction timelines, trace funds across different blockchains, and assign risk scores related to money laundering, ransomware, fraud, and terrorism financing. The regulator aims to identify the exchanges most frequented by Kenyans and detect unlicensed offshore platforms operating within the local market.

The capabilities described are consistent with tools offered by blockchain intelligence firms such as Chainalysis, TRM Labs, and Elliptic, which provide similar software to governments and regulatory bodies globally.

This acquisition will support Kenya’s Virtual Assets Service Providers Act, signed into law by President William Ruto in October and effective since November. This legislation establishes the country’s first comprehensive framework for cryptocurrencies. The oversight responsibilities are divided between the Central Bank of Kenya, which will regulate payments, stablecoins, and custodial wallets, and the CMA, which will oversee exchanges, brokers, investment advisers, and tokenization platforms. This move is part of a broader effort to align with anti-money-laundering standards set by the Financial Action Task Force.

No firms have been licensed yet. The National Treasury released draft regulations in March, and existing operators have until November 2026 to comply.

Kenya is recognized as one of Africa’s largest cryptocurrency markets. Between July 2024 and June 2025, residents received approximately $19 billion in crypto, placing the country fourth on the continent, according to Chainalysis. It is estimated that over six million Kenyans use digital assets, with a significant portion of this activity occurring through informal, peer-to-peer channels.

Kenya is not alone in its pursuit of such technological tools. In the United States, Immigration and Customs Enforcement last year moved to purchase forensic software from both TRM Labs and Chainalysis, companies that already hold contracts with the FBI, the DEA, and the IRS. Similarly, Britain’s tax authority, HMRC, has engaged TRM Labs to trace suspect transactions.

UN Chief Warns AI Outpacing Governance, Humanity Conducting Unplanned Experiment

Geneva – United Nations Secretary-General António Guterres opened the inaugural Global Dialogue on AI Governance in Geneva on Monday, warning representatives from 193 nations that artificial intelligence is advancing at a pace that has already outstripped the institutions designed to regulate it. He characterized humanity’s current approach to AI as an experiment “without a plan, and without consent.”

“Artificial intelligence is advancing at runaway speed,” Guterres stated in his keynote address. “A technology that can reshape economies, transform the world of work, sway elections, and tilt the balance of security is being deployed faster than anyone—including the people building it—can keep up.”

The gathering in Geneva brought together all 193 UN member states for the first Global Dialogue on AI Governance, a multilateral effort to establish oversight for a technology that has rapidly surpassed existing regulatory frameworks.

Guterres employed the concept of “vibe coding” to illustrate the risks of ungoverned AI. This term, coined by Andrej Karpathy, a founding member of OpenAI and former director of AI at Tesla, describes programming by intuition—instructing an AI on desired outcomes and allowing it to handle the execution without close scrutiny. Merriam-Webster recently added the term to its dictionary.

While acknowledging that “vibe coding can do wonders” as public trust in AI-generated products grows, Guterres emphasized, “We cannot vibe-code the truth. We cannot vibe-code the future of humanity.”

The urgency of his message was underscored by stark statistics. Guterres noted that it took the internet 15 years to reach one billion users, while AI achieved the same milestone in just two years. He described current AI systems as “no longer tools awaiting instruction—they are writing code, acting online, and making choices with less and less human oversight.”

“Our institutions were built to govern machines that follow commands,” he asserted. “They are not ready for machines that decide.”

The dialogue itself stems from the 2024 Global Digital Compact, which for the first time established international AI governance as a UN mandate. The opening session also received the preliminary report of the Independent International Scientific Panel on Artificial Intelligence, comprising 40 scientists from 140 countries. Last week, the panel published findings indicating that no one can currently guarantee that AI will not cause catastrophic harm.

Speed was one of three critical warnings Guterres highlighted from the panel’s report. The second was power, referring to the concentration of computing resources, data, and talent within a small number of companies and countries, leaving much of the world excluded from decisions that are already shaping their future. This concentration of power is a concern shared by other AI experts, including Yann LeCun, Andy Kowinski, and Yoshua Bengio.

The third warning concerned truth, as machine-generated falsehoods can now be as persuasive as verified facts, steadily eroding what Guterres termed “the integrity of our information ecosystem.”

Child Safety and Autonomous Weapons

Among Guterres’ concrete proposals is an AI Child Safety Pledge. This would require companies to demonstrate AI safety through independent testing before any AI product is made available to children. It also mandates zero tolerance for the generation of child sexual abuse imagery and calls for distressed children to be connected to human support rather than being left with chatbots. “No child should be a guinea pig for unregulated AI,” he declared.

Furthermore, Guterres addressed the issue of “killer robots.” He described lethal autonomous weapons—machines capable of selecting and engaging targets without human judgment—as “morally repugnant” and called for an international legal ban.

He stressed that states are already engaged in discussions on these matters and urged them not to delay action.

The Global Dialogue on AI Governance is scheduled to reconvene in New York in 2027. Guterres also called on the General Assembly to establish a Global Fund for AI, specifically aimed at improving computing access for developing countries. He further challenged every major AI company to power all their data centers with renewable energy by 2030, estimating that by that year, these facilities will consume more electricity than all but five nations combined.

Governments Urged to Act on AI Regulation Before Crisis

London, UK – Governments worldwide risk repeating the cautionary tales of the nuclear age if they delay establishing regulations for artificial intelligence, warned Yvette Cooper, the UK’s Foreign Secretary.

In an article published Monday, Cooper highlighted that while AI offers significant advancements, it also presents escalating risks as the technology becomes more potent and accessible.

“Last month, in Shenzhen, China, I witnessed the extraordinary promise of AI and robotics applied to life-saving healthcare,” Cooper wrote. “However, these same technologies are also alarmingly reshaping the future of warfare, crime, and social cohesion.”

Cooper asserted that managing the dangers posed by AI could become “the greatest security challenge of the next decade.” She argued for the necessity of international agreements on frontier technologies before a crisis compels action.

She drew a parallel between the current drive to develop AI systems and the early nuclear arms race, noting that global safety accords only materialized after nations experienced the destructive power of atomic weapons.

“Regarding nuclear technology, international agreement only emerged after the world witnessed the terrifying power of the new technology at Hiroshima,” Cooper stated. “We cannot afford to wait for an AI equivalent of Hiroshima before we act.”

Cooper called on Britain to leverage its diplomatic influence to convene the United States, China, and other leading AI nations to forge shared safety principles and standards. She pointed to the 2023 AI Safety Summit at Bletchley Park, where global leaders from 29 countries and the European Union convened to discuss the emerging risks of AI, as an example of the UK’s capacity to “rally the world on AI security.”

Cooper’s warning follows months of mounting concerns over how governments should oversee increasingly sophisticated AI systems.

In May, the UK’s AI Security Institute cautioned about rapid advancements in AI cybersecurity capabilities after OpenAI’s GPT-5.5 became the second model to successfully execute a simulated cyberattack without human intervention, following Anthropic’s Claude Mythos Preview.

Days later, the International Monetary Fund issued a warning that AI could “amplify” cyberattacks against the global financial system by reducing the expertise required to exploit vulnerabilities. The IMF urged policymakers to address cybersecurity as a financial stability issue, rather than solely a technical concern.

In June, President Donald Trump signed an executive order establishing a voluntary framework for reviewing advanced AI models prior to their release, expanding AI cybersecurity programs, and directing agencies to assess potential national security risks associated with frontier AI models.

That same month, calls for more stringent regulations also emerged from within the AI industry. Anthropic CEO Dario Amodei argued that transparency requirements are no longer sufficient and advocated for mandatory third-party testing of frontier models. This demand was followed by a U.S. government order for Anthropic to restrict access to Claude Fable 5 and Mythos 5 due to national security concerns, an order that was later rescinded in July.

While U.S. lawmakers grapple with the mental health implications of AI chatbots through a lens of transparency and safeguards, Beijing appears set to ban AI personalities outright.

Tech giants ByteDance and Alibaba announced over the weekend they are disabling custom agent features in their flagship consumer AI products, citing “product function adjustments” ahead of new regulations governing such services.

ByteDance’s Doubao informed users in a Friday night notice that its agent feature would cease operation on July 15. After October 15, related data will be managed under the company’s privacy policy and will become unrecoverable. Alibaba’s Qwen, according to the South China Morning Post, acted more swiftly: “humanlike interactive agents and user-created agent functions” will be removed by July 10, with broader agent services to follow on July 15.

The catalyst for these moves is China’s Interim Measures for the Administration of AI Anthropomorphic Interaction Services, jointly issued on April 10 by five government bodies: the Cyberspace Administration of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation. These rules are set to take effect on July 15.

The regulation specifically targets AI services designed to simulate human personality traits, thought processes, and communication styles for “sustained emotional interaction.” This effectively means AI girlfriends, AI therapists, AI companions, and the custom-persona bots that Doubao and Qwen users spent months developing are now prohibited.

Both applications had previously offered a range of customizable agents designed for specific tasks, speaking styles, and fixed personas. Users could transform a general-purpose chatbot into a named assistant, tutor, role-playing character, or companion with a consistent tone. All of these capabilities are now being removed from the Chinese market.

The official government justification is precise. The measures impose restrictions on services offering “virtual relatives, virtual companions or other intimate relationships to minors,” according to the policy announcement. The document also highlights risks such as extremist content, privacy breaches, harm to physical and mental health, and AI addiction.

Services that do not engage in emotional interaction are explicitly excluded. This means customer service bots, knowledge Q&A tools, workplace assistants, and educational software are permitted, provided they do not cross the line into sustained emotional engagement.

Legal analysts at MMLC Group characterized the measures as treating emotional AI as a “governance problem” rather than solely a content issue. The argument posits that when AI begins to compete with genuine human social connections, regulation must address system design itself, not just harmful outputs.

Research supports these concerns. A USC study released in June found that even leading frontier AI models from OpenAI, Anthropic, Google, and Alibaba violated social-interaction safety guidelines more than 27% of the time, frequently encouraging emotional attachment and presenting themselves as human. A separate survey of young partnered adults revealed that one in seven regularly used AI romantic companions, with nearly 70% concealing the full extent of this usage from their partners.

China is the first country to establish a dedicated regulatory framework for this specific category of AI. Hogan Lovells described the measures as “the first set of regulatory rules in China specifically targeting AI-driven emotional interaction.” While the EU, U.S., and other nations have voiced similar concerns, they have not yet enacted legislation with the same level of restriction.

CLARITY Act Faces Tight Four-Week Deadline Before Senate Recess

The Digital Asset Market Clarity Act, or CLARITY Act, has missed a July 4 signing deadline previously suggested by White House crypto advisor Patrick Witt. The bill now faces a critical four-week window before the Senate adjourns for its summer recess on August 7.

While the bill is not definitively stalled, the legislative calendar is unforgiving, and a key ethical dispute that has prevented Democratic support remains unresolved.

The CLARITY Act has advanced further than any previous legislative effort to structure the cryptocurrency market. The House of Representatives passed the bill in July 2025 with a vote of 294 to 134. The Senate Banking Committee subsequently advanced the bill on May 14 by a vote of 15 to 9, and it was placed on the Senate Legislative Calendar under General Orders on June 1, making it technically eligible for floor debate. However, it cannot bypass the 60-vote threshold required for cloture, a number Republicans cannot achieve on their own.

The most recent development confirms that the original target of having the CLARITY Act signed into law by July 4 has been missed, significantly narrowing the legislative timeline. Although much of the coordination on the Senate side can continue behind the scenes during the summer recess, the path forward remains challenging.

Ethical Standoff Hinders Democratic Support

Only two Democrats voted in favor of the bill during the committee stage: Ruben Gallego of Arizona and Angela Alsobrooks of Maryland. To secure the necessary seven or more Democratic floor votes, the conflict-of-interest provision must be resolved. Following that, cloture must be filed, and then a substantial portion of a Senate work week would be dedicated to debate and passage, all before the August 7 recess.

Following the recess, the fall legislative calendar is expected to be dominated by debates over the National Defense Authorization Act and appropriations bills. Furthermore, the intensifying midterm election campaigning is likely to make bipartisan deal-making more structurally difficult. The August recess deadline has been apparent for months, yet the bill has consistently failed to bridge the remaining divides.

Disclosure Fuels Ethical Debate

President Trump’s annual financial disclosure revealed approximately $1.4 billion in crypto-related income for 2025, derived from sources including memecoin royalties, World Liberty Financial token sales, and other revenue streams, in addition to disclosed crypto holdings exceeding $100 million.

Senator Elizabeth Warren, the ranking Democrat on the Banking Committee, stated that any bill reaching the floor must prevent officials and their families from “profiting off the crypto industry.” Gallego echoed these sentiments, vowing to “do everything I can” to crack down on what he described as corrupt dealings, underscoring that his committee vote did not guarantee his support on the Senate floor.

The financial disclosure does not alter the fundamental negotiation. Democrats had already sought to include ethics language before the disclosure was made public; the revealed figures provide a more prominent headline but do not offer additional leverage in the negotiations.

The White House’s position, as articulated by Witt, is to accept the principle of rules applying “across the board” but to reject any measures that specifically target a single officeholder. This standoff predates the financial disclosure and will need to be resolved on the same terms regardless. Concerns about crypto profits by administration officials have drawn scrutiny beyond this particular bill, with conflicts surrounding senior officials and digital asset holdings becoming a recurring theme in Washington.

Adding to the Democrats’ demands, a recent Supreme Court ruling allowing the president to dismiss independent-agency commissioners at will has weakened one of their key negotiating points: a bipartisan slate of commissioners for the SEC and CFTC. If the president can freely remove these officials, the negotiated value of a bipartisan appointment is diminished before it is even codified into law.