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John Martin 20 Dec 2023 ◦ 4 min read

AI Legislation Passed In Europe: What Is It And What Does It Mean For The Crypto Regulations

AI Legislation Passed In Europe: What Is It And What Does It Mean For The Crypto Regulations

Members of the European Parliament (MEP) and Council have reached a historic agreement on the Artificial Intelligence Law.

According to the legislation, the goal is to lay the foundations for the safe, ethical, and responsible use of AI in Europe, while ensuring the protection of fundamental rights, democracy, and environmental sustainability. 

In this article, we will review the AI law provisions and goals, take a look at the intersection of AI and crypto, and realize the potential impact of the law on the crypto industry.

Understanding the AI Law

A recent statement underscores that agreement represents a delicate balance. This is the golden means of promoting innovation and providing protection against the potential risks associated with AI.

The new rules address a number of troubling applications of AI, including a ban on biometric categorization based on sensitive characteristics, such as political or religious beliefs.

In addition, the law will end the inappropriate extraction of facial images from the Internet or CCTV footage to create databases for facial recognition.

Recognizing the potential threat to citizens' rights and democracy, the legislation also prohibits the recognition of emotions in workplaces and educational institutions.

In addition, social assessment is based on behavior or personal characteristics, and the use of artificial intelligence systems to manipulate human behavior. Vulnerabilities related to age, disability, and socioeconomic status were exploited.

He noted that negotiators have established limited guarantees and exceptions for the use of biometric identification systems. These include prior judicial authorization and strict restrictions on the use of these systems.

AI Rules Create Risks

For artificial intelligence systems classified as high-risk owing to their potential harm to health, safety, fundamental rights, and the rule of law, the legislation introduces clear obligations.

This includes a mandatory assessment of their impact on fundamental rights: consumers have the right to file complaints about AI systems that affect their rights. To support innovation and small businesses, the agreement promotes the creation of regulatory "sandboxes" by national authorities.

While the AI Act presents an opportunity to ensure responsible AI innovation while mitigating the risks of the technology, the crypto community is cautious about the potential impact of new regulations on the development and deployment of AI.

Crypto Industry Response

The crypto community has expressed concerns about AI legislation in Europe, in particular the AI Act, which is the world's first comprehensive AI law. Some members of the community are concerned about the potential impact of the legislation on AI innovation and development. 

Daniel Castro, vice president of the Information Technology and Innovation Foundation (ITIF), said that EU lawmakers should have paused any legislation until they better understood what they were regulating, highlighting the risk of unintended consequences from ill-conceived legislation. 

Failure to comply with the new rules can lead to large fines.

The agreement bill will now be officially adopted by both the Parliament and the Council and will become EU law. This marks a significant step towards responsible AI development on a global scale.

We can say for sure that this act is a significant step towards regulating the use of AI in the EU, with the aim of ensuring better conditions for the development and use of this innovative technology. 

The regulation is designed to create benefits, such as better healthcare, safer and cleaner transport, more efficient manufacturing, and cheaper and more sustainable energy. The different risk levels of AI systems will mean more or less regulation.


The AI Act establishes essential regulations for AI models to prevent them from posing systemic risks to fundamental rights, democracy, and environmental sustainability. This is a significant step toward guiding the development and evolution of AI in a human-centric direction, respecting fundamental rights and democracy, while also promoting business growth and expansion.

However, there are still uncertainties remaining because the final text of the agreement is not yet available, and the detailed implementation will be crucial. The agreement represents a significant milestone in AI regulation, but its success will depend on effectively addressing potential uncertainties.

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