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>>The European Union Blockchain Observatory and Forum (EUBOF) has recommended ways to integrate blockchain and artificial intelligence into EU policy.

The European Union Blockchain Observatory and Forum (EUBOF) has recommended ways to integrate blockchain and artificial intelligence into EU policy.

crypthub

1/24/2025, 11:48:01 AM

Introduction and Background

The European Blockchain Observatory and Forum (EUBOF), an initiative of the European Commission, recently released a report urging the EU to prepare for the integration of blockchain technology and artificial intelligence (AI). This proactive move aims to safeguard user data from potential security threats.

Exploring the Potential of Blockchain and AI

The report, prepared by the Directorate-General for Communications Networks, Content, and Technology, delved into the combination of blockchain technology with AI. It highlighted blockchain's secure data storage and management capabilities, particularly in sectors like healthcare and finance. The document also introduced decentralized AI networks as a potential disruptor to the current centralized model dominated by large corporations and governments.

Web3 Trends and DeFi

The report further explored emerging trends in web3, including decentralized finance (DeFi) and smart contract enhancements. DeFi offers financial services without traditional intermediaries, underscoring the need for regulatory frameworks to ensure consumer protection and financial stability. Smart contract functionalities were also emphasized as crucial for fully harnessing their potential in various applications.

Security Concerns and Recent Incidents

The report addressed security incidents in the cryptocurrency space, referencing breaches at DeFi lending platforms Sonne Finance and Hundred Finance. These incidents highlight the potential risks associated with the unchecked deployment of AI technology in finance, reinforcing concerns expressed by experts and regulatory bodies.

Regulatory and Philosophical Perspectives

Yuval Noah Harari, a renowned philosopher, discussed these issues at the Bank for International Settlements (BIS) Innovation Summit, advocating for caution and effective regulation to mitigate misuse and negative consequences of AI integration in finance. In January 2024, the US Securities and Exchange Commission (SEC) issued an alert highlighting investment frauds involving AI and other emerging technologies. SEC Chair Gary Gensler also expressed concerns about AI's impact on financial systems, warning against practices such as AI washing and algorithmic bias.