California Mulls New Restrictions For AI Development: AI Coins Fall
- California's Senate Bill 1047 imposes restrictions on AI language-model developers.
- While Elon Musk supports the bill, believing in the need for AI regulation, others like OpenAI and Andrew Ng argue that it could hinder innovation.
- The bill is set for a vote in the Assembly before potentially becoming law, if California governor Gavim Newsome signs it.
- AI crypto projects fell 4.5% in the past 24 hours as debates rage around the bill's potential impact.
California frequently positions itself at the front edge of regulation. And since Silicon Valley is the cutting edge of innovation, conflict often ensues.
The current arguments over California Senate Bill 1047 are a good example, with debates raging between Elon Musk and Nancy Pelosi over what the new rules might mean for AI projects like NEAR and Render.
In the wake of the news, the market cap for AI-based cryptocurrencies fell 4.5% in the past 24 hours. Multiple coins suffered significant losses, like $VAI (-14.4%), $BCUT (-11.3%), and $EMC (-13.3%).
What is the bill, and what will it mean for AI and any AI-related crypto projects? Time to find out.
New Rules for New AI ProjectsThe bill mandates that AI developers include a kill switch,' undergo annual safety audits, and maintain comprehensive safety plans.
Companies must also ensure their AI models do not pose significant harm. This is one of the major concerns for critics of the bill, as harm' is notoriously difficult to define.
The requirements for a kill switch, safety plans, and audits all have to be set up before training or developing an AI model. Moreover, the safety plans have to be publicly available - and unaltered - for five years.
The annual review requirement also establishes an independent auditor to review and enforce the designated safety plans.
Why all the rules? The bill opens by explaining their rationale for the new rules:
Existing law requires the secretary to evaluate, among other things, the impact of the proliferation of deepfakes, defined to mean audio or visual content that has been generated or manipulated by artificial intelligence that would falsely appear to be authentic or truthful and that features depictions of people appearing to say or do things they did not say or do without their consent, on state government, California-based businesses, and residents of the state.SB 1047
You're reading that correctly; the proposed legislation builds on existing rules and is greatly concerned with the threat... of deep fakes.
But from that fairly minor starting point, the California legislation is imposing an ambitious set of AI rules that are far more detailed than anything else currently in use.
And because those rules are more detailed, they're causing a bigger reaction.
Mixed Reaction from Industry VoicesSurprisingly, Elon Musk supports the bill, believing in the need for AI regulation.
This is a tough call and will make some people upset, but, all things considered, I think California should probably pass the SB 1047 AI safety bill.
For over 20 years, I have been an advocate for AI regulation, just as we regulate any product/technology that is a potential risk...
- Elon Musk (@elonmusk) August 26, 2024
Others, like OpenAI and Andrew Ng, argue that it could hinder innovation in AI and beyond. The bill establishes an entirely new Board of Frontier Models,' and that enforcement falls to the California Attorney General.
The bill proposes a new regulatory framework for AI. If this trickles down to other fields (like AI meme coins), it could have a depressing effect on the development of new technologies and the integration of AI with other fields like crypto.
Is Senate Bill 1047 Already Chilling AI Coins?The market cap for AI-based crypto projects sits at over $24B. But with a decline of over 4.5% in the past 24 hours, it's fair to ask if Bill 1047 is already having a chilling effect on California's AI development.
The bill could potentially impact future projects as well, like Sahara AI from Sahara Labs, supported by Binance. NEAR Protocol, a well-known AI project, hasalso dropped by 5.8% in the last 24-hours, showing an alarming trend.
Will California's AI industry continue its rapid growth, or fall into the doldrums with the new legislation? And will AI coins continue their downtrend or is this a temporary dump?
We'll see what happens next but Bill 1047 doesn't bode well for the crypto industry.
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