Regulating the Revolution: AI, Blockchain, and the Future of Policy

Transcript

[Music] welcome to regulating the revolution Ai blockchain and the future of policy thank you all for being here tonight I'm really encouraged that there's such a strong interest in this really important

issue uh I'd like to start out by thanking Urban Tech Exchange they are a Hands-On lab for Tech providers developers Educators and researchers and that is the beautiful venue that we're at uh tonight here and I'd like to thank one of our big sponsors stand with crypto uh stand with crypto is a 501c3 uh C4 nonprofit uh and the champion for Clear Common Sense regulations in the crypto industry and they are mobilizing the 52 million crypto owners in the US to unlock crypto's Innovation potential and Foster economic freedom and I have a second sponsor uh that we are very grateful to tonight D did digital Ascension group is the parent company of

a Syndicate of businesses and family offices that specialize in digital assets and offer bepoke solutions for a wide range of emerging technology businesses and actually I have Rick here and could you share a little bit about D yeah uh Elizabeth thank you for that and uh first off thank you to everybody attending and watching online with us this evening uh yeah so to tell you a little bit about digital Ascension group we are a Syndicate of multif family offices and businesses that specializes in crypto and digital assets um we have been in the crypto blockchain space since 2016 and that's a little bit about us wonderful wonderful thank you so much and thank you to you for coming I'm

encouraged that there's so much strong interest in this topic it's a critically important issue that would that will really shape the future of technology in our country so to kick things off we're going to get into it uh we're going to dive into one of the most critical and rapidly evolving conversations in Tech regulatory Frameworks in blockchain and AI these Technologies they're not just revolutionizing Industries they're redefining privacy security and even power structures globally the rules being written right now will determine how we govern decentralized systems protect consumers and manage ethical challenges in AI from Deep fakes to data privacy how

governments choose to regulate or not regulate these Technologies could affect everything from the way we do business business uh to way we operate to National Security risks so our panel this evening is going to dive into one of those high stakes questions with a focus on the real legal and compliance challenges developers face today as well as the ethical dilemas that AI is creating and uh it's really become a tug-of war for who controls the future of tax so it's a very important issue and so before we get into the first question I would like to do some introductions of my myself and the others I'm Elizabeth Hansen I am a community builder in Tech and I plan

events around blockchain and AI I'm also a CTO a software engineer and I'm a blockchain consultant actually since about 2016 so it's really a pleasure to be here yeah so I'm Rick Tapia um general counsel uh for digital Ascension group I'm also the co-founder of draft chain Ai and we are a legal Tech AI platform for attorneys and I guess an easy way to think of us as chat gbt for lawyers that's a little about myself all right everybody uh thanks for having us here uh my name is Nick ree I'm the uh co-founder COO of Frontier Foundry we're an artificial intelligence company uh producing privacy preserving AI so we actually have llms that don't

require the cloud or the internet um and so uh before that I had a long career in government so a lot of uh Homeland Security National Security experience that we'll talk about tonight he everyone my name is Mark Seany I am an attorney I've been in practice for around 15 years I have a office in Boston and I'm partnered with two other attorneys in New York we are a boutique that focuses on high stakes business litigation blockchain litigation and blockchain strategic counseling for entrepreneurs investors and other participants in the blockchain economy hi everyone my name is Brandon Street

and I am the CEO co-founder of creative collab we're an incubation company for nft projects and we like to solve problems as well so a lot of web 2 companies would like to have web 3 technology but they don't necessarily need to call themselves a web three company so we helped them find that solution there wonderful thank you Brandon okay we're going to start our discussion tonight by talking about the regulatory Frameworks that are being developed around blockchain and AI both in Washington as well as globally uh Rick we're going to start with you so we'll pass the microphone uh down to him and I want to share you know from my firsthand experience as a developer building in blockchain navigating these regulations these emerging regulations

is one of the biggest hurdles that really adds to uh the complexity of what we try to accomplish in technology so I would love it if Rick if you could shed some light on how to overcome them and my question specifically is what do you foresee as the key challenges for developers with AI driven decisionmaking in the context of blockchain and non-blockchain applications that's a really good question so there's really two areas I'm going to kind of discuss kind of regarding some challenges with AI systems and really the first one is going to be really focused on the quality of data that you have and kind of zooming out a little bit when we think about Ai and I was talking about this with Nick a little bit earlier AI

companies really at the heart of what they are are data companies and the higher quality data that you have the more likely amongst other factors you have to be actually create better outputs and so I would say that's one really difficult challenge I see the AI industry currently going through mostly because the data that is being used in a lot of these AI companies is scraped from all over the web so Nick kind of has a really good analogy with this it's like hitting kind of a broad tar Target and expecting to get kind of a narrow answer and so there's a reason why if you use some of these AI systems you may ask it to you know do a specific task or give it a specific prompt and you'll get a very broad answer um so as the data

inside these AI systems becomes more refined over time you'll start to see better systems in place um the second aspect I want to really kind of touch on and this is kind of more of a broader theme that we're going to touch on a lot tonight so me is really around accountability and I think what that means is who's accountable for what not only these AI systems generate but then who creates them right and and kind of crossing over into the blockchain context we see a lot of litigation and legal issues cropping up with companies and people who have developed different tools and Technology systems that are utilized by people in sometimes um bad contexts and sometimes in good contexts

so I think those are going to be some of the issues that developers are facing today that's really interesting Rick and I can tell you I think I speak for a lot of engineers in this room when I say that the most important part of any project is really clear um specifications so um you know in order to be successful Clarity really has to be made on the requirements um and it almost seems that when you have a brand new technology it's one step ahead of the laws that are meant to regulate it which I think is part of the reason why things are so tricky right now right um so this next question is actually for Nick uh now let's explore the government regulations around how AI specifically is evolving particularly where they intersect with blockchain I think

that'll be very exciting for a lot a lot of people in this crowd uh because the rules are really going to impact how much Freedom developers have to innovate so my question for you is how could AI specific regulations potentially intersect with blockchain systems particularly in areas like automated government ments and decision making yeah perfect so uh just for a quick background I was the director of emerging technology at uh the Department of Homeland Security before I co-founded this company and we worked on these policies and and strategies and things like this like at the at the White House and and at these at these kind of higher levels of government and really the question Elizabeth you asked was a question about convergence and so

convergence is when you have more than one technology that you bring together to create a cap ability that is larger than the pieces that it was made from and so you can think of AI as a a converging technology as in you it can be integrated into several different applications and so if you are going to have you know if you have a large data set back to kind of what Rick was talking about that's just a data set it's just a data set until you put the analytics and things like that on top of it to make it into something that is usable intuitively well now it's no longer a data set is it now it's an AI application and so so I think the first where I want to start this this answer is with the idea of convergence so if we're going to bring Ai and blockchain

together we're creating a a converging technology uh kind of system here right so then if we're going to talk about kind of what what the policy environment the regulatory environment looks like um what I would say is is it's most useful to look kind of over time at the different policies that have come out to understand kind of like where the momentum is going and so with AI you can go back way back to some of these earlier executive orders um you know from the last presidential Administration one of which was uh executive order 1 13960 which was about uh trustworthy principles uh for the use of AI in the federal government and you look at how the policy is building since then and that gives you an idea of is it

really disconnected is it contiguous or we kind of on a a path towards something that makes sense and I you you saw in the in President Biden's executive order there was a call for regulation with on for AI but not to any uh agencies that have the regulatory authority to do it so they wanted DHS to do it DHS doesn't have that Authority and statute so there's quite a bit of work to be done to make that happen but you are seeing a lot of support uh to these emerging Technologies coming out so I would say that blockchain will be affected by it to the extent that it is integrated into blockchain uh applications and that convergence uh

concept will become really important here oh that's fascinating thank you Nick um you know AI is developing at such a staggering pace and so it's already presenting these legal challenges that we've never faced before and would you even say that there is less regulation for AI at this point than there is for blockchain uh yeah yes because really the the uh the places that we're seeing regulation with AI are places where there's existing Regulatory regimes and so you know if you if you're already in a regulated industry you probably have some kind of AI regulation that you have to deal with that makes sense yeah so that that's mostly where that exists but but to like this kind of big broad monolithic kind of like the EU AI act

right like some big piece of legislation that's going to regulate like all of AI we don't have that but we do have it in places where there are already regulatory regimes thank you okay this next question is actually for Rick um what are some of the emerging legal issues with AI as a whole that we are seeing now that and and we might also see in the future yeah um well uh there's a lot um and there's many more issues that are coming into into the fold so the first aspect that I'll touch on is regarding victimless crimes and what I mean by that is and I know this is a bit of a of a heavy topic to to kind of discuss but when you think about you know child pornography and and

when we see today now that you have ai systems that can actually generate you know child pornography without an actual child that is you know a living child being depicted how do you handle that from a criminal perspective and from you know sitting here if you're a a judge or if you're sitting in a courthouse right how do you look at this do you have liability that passes on to the development company that allowed for this to be created is it you know is there obviously liability at the hands of the end user who actually created it or prompted the AI to create it and then you also look in the context of also um you know victim crimes related to AI um just yesterday I just read an article uh

about a young 14-year-old boy who was communicating uh with an AI chatbot and um over time he started to develop romantic feelings for this chatbot and got to the point where he isolated himself from his friends from his family from school and um unfortunately this young man ended up taking his own life and subsequently his family has now actually filed a complaint against that AI company um for not having the proper guard rails in place for situation issues kind of there's also issues related to you know more traditional legal related

matters such as intellectual property uh data privacy obviously as Nick was kind of touching on cross-jurisdictional issues you know obviously in the day and age of the internet where you can try to Silo off liability to certain countries and do things like geofencing it's still very hard to enforce and have a uniform system in place for issues like this that's a really good example of why whether we think we love or hate regulation why it's actually so important right so that I mean you brought up a really sobering example of why regulating AI is important you know for blockchain we can think back on FTX right so there are reasons that we really should um want good Common Sense

supportive regulation so you know the global nature of both Ai and blackchain regulation means that it doesn't exist in a silo right so different countries are taking very different approaches and so I have another question for you actually concerning this how do you see governments responding to crossb Challen Alles in AI regulation especially with decentralized Technologies like blockchain yeah that that's a really good question and and I really don't think we have a really solid answer yet and I know Mark could probably um you know shed some more light on this as well from a litigation perspective but um we really don't have a clear answer yet I mean we have you know one set of countries that you know are really

friendly to cryptocurrency and blockchainbased businesses and tokenization other countries that are not so much um probably one of the ones that we're sitting in right here right now they're not the the most friendly towards crypto and blockchain but that that also might be changing you know from a policy and Regulatory perspective you know with this election coming up I think you know really crypto is on the ballot and I think it's really important just not to go off on a tangent on this but for people to really be informed about what their local legislators and their Federal legislators where they really stand on crypto and really kind of understand the issues um so yeah to answer your question question I I think really the the heart of the matter is can we create some sort of uniform

guidelines for companies to follow um regardless of wherever their jurisdiction is and I think we're getting there you know you're starting to see some sandboxes come into the fold where uh different countries are building out these regulatory sandboxes and testing out the technology and use cases um but we also have a long way to go in my opinion oh absolutely absolutely we do so I think we're just at the beginning and um you know okay actually let's let's move on to the next topic um unless there was something that you wanted to say no okay um we've just explored the shifting landscape of regulations but the real challenge for developers and all those building in the space is being compliant um and making sure that your projects are compliant

which is very difficult to do when the specifications are not super clear so for those building in the blockchain space um especially with AI involved compliances where things can get very messy and also very costly actually so understanding how to tackle issues like kyc and AML token classification and data validation in both blockchain and I AI integrated applications really could be the difference between success on your projects and major legal setbacks that can break a company especially startups so it's really important to be informed on these issues and Rick I have a question for you on this how could AI streamline or maybe complicate traditional compliance in both the

crypto and the non-crypto world yeah and I and I definitely want to get Mark's thoughts on this as well but um you know when we think about you know Ai and and kyc and AML compliance in a lot of ways AI can provide a lot of streamlined solutions for this process where the problem comes in in my opinion is much like humans AIS also have bias as well if you think about it humans are the ones programming and training and providing context to these AI systems so it it's only logical to conclude that the AI also is going to have this as well um and when you obviously expand that out on a on a cross jurisdictional basis where there's a lot of aspects of of different rules and regulations and

Reporting mechanisms in different states and countries it can be very Pro you know problematic very quickly so um I I'd like to think you know someday in the future we can streamline a lot of these processes with AI but um we certainly have a little bit of a ways to go I would agree with you thank you Rick actually yes we're going to turn to mark for this next question and you can also expand on that if you'd like um you're definitely the guy for this um actually so let's dive into the legal liabilities that developers face especially around broker dealer concerns and comp compliance with AI driven systems um so mark my specific question for you is what are the legal liabilities developers face with AI enhanced

platforms like Unis swap um ether Delta especially regarding liquid liquidity management yeah there's a lot to unpack there so it's interesting you bring up Unis swap so maybe I'll discuss that in a few different lights and then extrapolate from that what some developers should be thinking about based on the current treatment so Unis swap actually has three parallel litigation proceedings all uh either recently resolved or still ongoing there is a a federal SEC investigation of Unis swap that was noticed to Unis swap by virtue of a

Wells notice Unis swap received that and was very you don't have to publicize a receipt of such a notice and you certainly don't have to publicize your response oftentimes those are filed confidentially but in this instance Unis swap went and hired a very uh well acclaimed lawyer in the crypto scene who had actually litigated on behalf of grayscale in connection with the gbtc trust and filed a response to the SEC explaining in extensive detail why the alleged Securities Law violations regarding Unis swap were unfounded one of the key data points for that response

relates to a second proceeding involving Unis Swap this one brought by a user of the protocol is everyone here is familiar with Unis swap as a as a service is that true great sweet so we all know how Unis swap works right you're a random user you hold one coin you want to get a different coin you interact with the protocol but unlike centralized exchanges your your the coins are never in the custody of Unis swap uniswap is really just creating programs and it happens to also have an interface but it's it's not maintaining those programs it's not maintaining the underlying programming for the interface that's just created

and launched out into the world and so one of the users of Unis swap exchanged their ethereum which is valuable for a bunch of scam tokens and this happened several times they collectively sued Unis swap on a class basis alleging that Unis swap was liable for the decline in the price of their tokens well that's interesting because Unis swap didn't create the tokens Unis swap didn't have any direct relationship to the tokens other than that they launched some computer code that allowed the users to uh make that exchange that was the exact argument that Unis swap leveraged in its motion to dismiss and the judge judge in

the southern district of New York actually the same judge that is overseeing the case against coinbase by the SEC agreed with Unis Swap and dismissed the case saying that there were no Securities Law violations even if you assumed without deciding that the underlying scam tokens were Securities there were still no Securities Law violations on the part of Unis swap the third proceeding which I'll just touch on very briefly but I mention it because it actually is a contradiction of sorts Unis swap just last month settled charges by the cftc and paid hundreds of thousands of dollars in connection with that settlement for alleged facilitation of

transfers of commodity swaps and commodity derivatives in violation of the commodi uh Futures Trading commission's regulations well that's interesting because if it's not operating as a Securities Exchange and it just want a federal judge judges decision on that point then how is it also simultaneously operating as a Commodities exchange so you even have the same platform the same set of programs coming out in two different outcomes so then to so that's a bit of a long-winded windup to get to your the the meat of your question which is okay against that backdrop with just one protocol what is a developer to do and this is very intense for me because I literally had

this conversation with perspective client play out over the past week clients's got a new idea that has a lot of similarities in some senses to what uniswap is coming up with and they said Mark we're new we haven't yet raised we would love for you to be able to advise us regarding some of the legal compliance Landscapes I gave him a budget because and it was a very streamlined budget and they said oh that's not something that we can afford at this very moment and if I had a dime for every time I had that conversation with a client I would have needed to charge this new client anything because I'd have a lot of Dimes I mean this this is literally the exact struggle that many developers are going through and

unfortunately I don't have a clear answer in terms of a solution often times there are creative Arrangements that can be aligned with between the lawyer and the client whether that's the lawyer taking a small position in the client or getting creative with their fees but the solution is never from my perspective just to skip the compliance discussion altogether because that can in turn create a system of uh uncertainty going forward but that's uh at least in a nutshell one response there yeah and I just want to Echo Mark's sentiments actually as well to that point you know when I was in private practice and working with a lot of blockchainbased companies I had very

similar conversations and the the Stark economic reality hits when you tell a client hey it's going to cost you this much to do it and the other reality is that you're going to have to do this offshore and for us as a country saying that hey you have a great business idea but you have to take it offshore it really pains me as somebody who is you know you know an American and wants American businesses to stay here but and to to Mark's Point as well not every you know startup has 40 or $50,000 in legal fees to launch out their product and really quite frankly they shouldn't have to but the current regulatory environment says you pretty much have to or you're not going to get off the

ground yeah it's interesting you know Mark you're talking about uniswap being charged for the way some of their users uh were using their software in ways that weren't intended and as an a builder in the decentralized space that's really scary to think about you know creating open source software for the good of society and then some nefarious user using it for an unintended purpose and then me being personally held accountable and that's also you know something new that I think we're seeing with you know the storm case of a citizen being charged in in a criminal matter like this if if I have that correct but are you talking about tornado cash yeah okay yeah with tornado cash yeah so it's it's really unsettling thinking about um building in the decentralized space and then possibly

being held responsible for uh for something somebody decides to do with your software yeah yeah I I completely agree and it's funny that you bring up this concept of you create something and then you release it into the world because hearkening back to Unis swap that was the exact analogy that was made by both sides before the judge the plaintiff the the user of the protocol said this is as if you created a self-driving car and then the self-driving car got released out into the world and was manufactured poorly and created accidents and the defendant said no it's not it's as if we created a self-driving car it operates correctly but the person who then decides to rent out the self-driving car uses it to

purposefully create a crow to purposefully do something nefarious and in that particular case the judge endorsed that reasoning tornado cach is the complete opposite and there's also another case going on tornado cash is obviously an ethereum based mixer there's Bitcoin fog which is a fog based mixer and there have been parallel proceedings they're one slightly ahead of the other but both going against the founders who happen to have the same first name as if we're not living in a simulation and those theories which are even more coercive than the civil case brought against uniswap because these are criminal prosecutions where the developers freedom is at stake

and in the case of Bitcoin fog has already been found guilty these are extremely scary propositions for developers now I don't want to be too Doom and Gloom because it is a well-known non-secret in the industry that a very common application of mixer and Tumblr applications is to avoid money laundering restrictions and in fact going back to the um to the Unis swap case the fact that the protocol could be used for a ton of things that were entirely valid and were not illegal was one of the rationals that the judge

anchored their endorsement of the of the legality of the protocol in the Unis swap case whereas in the mixers and tumblr's case there's at least more of a shadow of potential liability but that doesn't that's really a small glimmer of hope in the overall scheme of things because the same core activity which is I create something and I release it out into the world and it runs on a self-executing level I am not maintaining it I am not profiting from it on an ongoing basis and yet I'm still liable that should and rightly does send some very strong shivers down the spine the development Community yeah this has really gotten to be quite a controversial issue with token classification and it has um you know

resulted in a massive litigation battle you know uh with with ripple with terbs and this could really reshape the future of crypto regulation so if you could briefly touch on how can companies mitigate this how can they mitigate these risks dealing with token classification in such you know an uncertain regulatory environment yeah I think there are at least two answers in part to that so one of them is what we saw successfully in Unis swap where the court didn't even have to address that thorny question of the underlying classification of the tokens that were being exchanged the court said in the in the civil case brought by the private plaintiff doesn't matter it's

not a Securities Law violation anyway now in the cases against the centralized exchanges and there are many that question is unavoidable because in these centralized exchange cases the exchanges are taking custody and they are uh operationally exercising core functions that if the underlying asset is a security would be subject to the Securities laws so in that scheme and you brought up a couple of them last year we had from the same court two different judges but within the same court in the southern district of New York within a few weeks of each other two polar opposite decisions one in the Ripple case concluding that secondary

sales of tokens even if they would have been Securities when they were primarily issued were not Securities transactions on the secondary Market that's in the Ripple case then a few weeks later there was a judge in the Tera form case that concluded exactly the opposite on the secondary trading issue said that they were not uh persuaded that that was an appropriate differentiation and that terraform case uh just earlier this year resulted in A4 billion fraud against a fraud verdict against terraform now we would probably as a community endorse the result there in in terms of yeah that was everyone agrees a scam in many

senses but the the the tension in the law is concerning now we have four cases against centralized exchanges Kraken binance coin base and most recently crypto.com got a Wells notice and rather than waiting for the SEC to sue crypto.com crypto.com affirmatively went out and sued the SEC which is a bold move but one that I uh was very happy to see and enjoyed reading their complaint basically saying that the SEC lacks The Authority we can get all nerdy around Chev the chevron case which had given agencies a high degree of difference in how they interpreted their governing

regulations that was overturned by the Supreme Court recently and there's this additional ground swell of challenges by regulated entities against the regulators and so crypto.com is an example of that but I guess stepping back because I don't want to Boris with too many details on these cases stepping back it just illustrates that the landscape is incredibly uncertain Kraken filed a motion to dismiss denied coinbase filed something similar a motion for judgment on the pleadings denied binance filed a motion to dismiss large denied so those cases are proceeding and we'll see what happens in the crypto.com affirmative case against the SEC it should be a fun fun thing to observe that's really insightful and it's really fascinating hearing from

somebody somebody who's inside the industry um and in the legal way so fascinating thank you for sharing that with us Mark let's move on to enforcement challenges uh because we've just covered the complex worlds of compliance but even when companies try to follow the rules enforcement is where things get really interesting and actually surprising controversial so we're diving into how governments are trying to keep up with enforcement of both blockchain and AI uh especially in terms um of privacy nfts and platforms like tornado cach which came up so this next question is for Nick and um you know these enforcement challenges really could set a major precedence which is why it's so critical that we get this

right so my question for you is how can Aid driven platforms maintain compliance while upholding user privacy in decentralized networks yeah so I when we're talking about compliance uh with regulatory Frameworks and things like that that's really especially if you're a developer that is a a a future facing question you should be you should not be thinking about the regulatory environment as it exists today you should be thinking about it as you you can see it evolve into the future and so so let's go back to Rick's earlier comments about about data and so if you're a an AI developer or something like that and you have you know data that you're working with you can see what the the policies some of the state laws some of the uh you know the like

the EU laws and things like that you can see what kind of the direction that that's starting to go and I'm not saying to do to make wild guesses you want to make very educated guesses but you want to look at at uh at Regulatory Compliance or compliance kind of in you want to Future proof yourself and so for going back to the data example are we going to be able to just kind of dump all data into these you know kind of big massive um you know Cloud native you know multi-party Cloud AI tools there's probably going to be some kind of limitation and there already are limitations in some of the regular regulated Industries but are we going to be able to continue to do that probably

not now how long will it take that's that's a bit of a question but you when you're thinking about building your tools and you're thinking about how to think about compliance think about compliance not necessarily as it exists today but as you can see the momentum as as it's moving forward so that's what I was referring to with looking at these you know the kind of entire Corpus of you know whether they're you know executive orders or even like EU laws or things like that you can see the momentum pay attention to that and build kind of with that future uh the future proofing in mind because if you don't get your your product out for another year you might end up kind of of missing on the engineering side something that

is now in policy that you have to comply with so always think of that as like think ahead of where the regulatory environment is today could you mention um just briefly what type of enforcement actions you think we will see in light of tornado cach um so I I so to be clear right we're we're we're talking about uh actions that are within an existing regulatory regime we're not talking about a broad-based uh you know regul against blockchain as a whole or AI as a whole so so I I I also I teach on the side and I've got I've got you know students from different countries and this is always a fun conversation with them because it's it's really interesting where the way

that the US looks at regulations and enforcement and the way that like Europe looks at it and so if you look at Europe Europe has the EU AI act they have you know uh gdpr they have these different acts uh there are these big monolithic laws that kind of cover everything and their view is something bad might happen so we should go ahead and regulate but the US's view is something bad is happened 17 times now maybe we'll maybe we'll regulate but we'll regulate lightly right so the US has a very different kind of like view on how this kind of unfolds so in terms of the of of how of the enforcement actions I mean I think we've seen a couple of you know Mark talked about it you know perfectly

here with with some of these different cases so I do think we'll see a tightening of it but exactly like what that looks like I think remains to be seen because again when we have some cases that are being dismissed and some cases that are proceeding and we have you know very um you know these cases that are kind of in in Flight right now I think that really is going to determine what the enforcement actions look like once that precedent is set can I pick up on that yeah and yeah and I have a question coming up for you as well okay so I I'll pick up on that and then I'll take the question so yeah you mentioned these EU wide regulatory schemes and the other one specific to crypto on blockchain is M and M has now been adopted at an EU level and is being

implemented on a country by country level at a rapid Pace because the adoption order requires that it be uh adopted quickly and what's very interesting is we are seeing companies now that have a US presence but that also have a European presence and maybe also have a presence in Asia and other parts of the world they are using MAA as their framework because it's very hard if you're a company to have a bunch of different compliance systems and a bunch of different compliance requirements across various jurisdictions your company you want to have uniformity so what we're starting to see In America still at the earlier phases but the

American Vacuum of legislation and regulation is Paving the way for American businesses to buy by default really just by inertia become not actively legally subject to but as a practical matter subject to significant regulation that's being orchestrated by the EU which is interesting and you can talk about whether that's good or bad but at least from the perspective of self-governance it's not the way it's supposed to work agreed so let's talk about actually enforcement in the context of autonomous Aid driven smart contracts uh because this is actually a great example of how Ai and blockchain can work together so how do you see

governments enforcing regulations when the software itself is designed to operate autonomously which we just touched on a bit ago yeah so I won't repeat what I said about the Tumblers and mixers but there are obviously other self-executing functions that exist as on the basis of blockchain and then even related to that there are decentralized autonomous organizations whose entire legal structure or lack thereof is designed to avoid the need for active governance by an entity and really allowed uh designed to allow the decentralization that's uh embedded in the blockchain Eos more broadly to apply

specifically to a group of individuals and so in that context we've actually seen actions by private litigants and by government entities against Dows and one of the Premier in terms of headline grabbing actions against the Dow was brought by the cftc last year or the year before and has been playing out in recent months against a dow that made certain products that the cftc characterized as derivatives available to customers that if you uh conceive of those products as derivatives shouldn't have had access to those and this this called different things bzx or Uki and one of the main defenses launched by that Dow was well

it's not us we aren't a legal entity and so you can't tag this entity with this alleged violation we're just a system of self-executing contracts and self-executing structures and then the court said okay well if it's not you who is it and I'm going to actually potentially enforce liability against all the members of the down that's a very scary thing for a lot of us who are down members and we won't would want to be considered subject to personal liability or liability of our LLC that we own for something that's happening completely outside our control at an organizational level at the Dow so we have seen both and this is this spans both private litigation and more to your

question at an enforcement level we have seen regulators and private citizens go after Dows that are supposed to be autonomous and yet importing more classical Notions of a say a Del Ware corporate structure and fiduciary duties and respond at Superior employer liable for the conduct of its employees importing those Concepts that yes have remained true for hundreds of years in other spheres but don't map on very well to the more self-executing forms of governance we're seeing courts grapple with how to address that and uh not to be a broken record but it's not exactly consistent so what would you say to people who say that

you know the sec's history of who they go after uh suggests that they aren't putting the real effort into going after the nefarious players who are doing a rug pull on consumers for instance um or otherwise really aren't protecting the public as they should but instead are chasing the big fines from the big players right who are often often a lot of these are actually pretty transparent with your consumers these larger companies but I'm just asking for a friend not for myself but yeah you know it's it's funny because two years ago the the there was a much different version of that question which is why is the SEC only going after the little guy why are they not going after the big guys and I guess the SEC heard that and decided to go after the big guys but no

I think it's a really fascinating exploration of what's really completely non-legal and non-political in nature but really goes more to the the function of an organization so the is a group of humans we all have our own aspirations that we're trying to achieve and the folks within the SEC are humans who have their own aspirations and they're led by a human and they're and that and the commission itself is five humans well why what does human nature have to do with any of this well there's incentives around publicity there's incentives around headline grabbing actions and steps that can be taken that can then be

propelled used to propel the careers of some of these individuals so I think part of the reason that we've seen a shift away from just the small guy who wasn't really hurting anyone to the big guy who is still isn't really hurting anyone is a desire to have increased notoriety and perhaps a bit of the uh agency hearing from the community but what has remained consistent in that question across the few years is that there are still tons of the actual Bad actors getting away with it and I think the reason for that is many of the Bad actors are external to the United States but are taking actions in the United States because so much of this technology just

isn't border prooof and so if the if the actors are not within the United States there's very little that can be done about them moreover often times the actors become insolvent very quickly or they uh are hidden behind a series of shell companies that are hard to penetrate and so at a functional level those folks are getting away with it and it's wrong and it shouldn't be happening and if you're talking about allocation of agency resources more in my opinion should be devoted to solving that problem it currently isn't happening yeah I mean the big guys versus the little guys I don't want the little guys to get sued either because the thing is you get sued by the SEC and this takes

your company out who can afford the legal fees for such a massive battle um and that's kind of heartbreaking to see a lot of the companies who've gone under just for that for trying to follow rules that you don't hear about until you get sued so it's uh it can be very frustrating so thank you for addressing that and I'd like to move on to Brandon actually uh let's shift to the nft space because I know we have a lot of nft creators right here in Detroit I think they would be eager to hear your Insight um let's talk about nft because this is where you know you have Aid driven platforms they're really pushing the boundaries of digital art and enforcement is struggling to keep up of course so the challenge here could help redefine how we protect intellectual property and manage decentralized

ecosystem so my question for you is what are the enforcement challenges for AI driven platforms yeah I would say time is the biggest thing I think that there's just so much time in between being able to have proper regulation to go to these AI platforms and then to get them developed a lot of these AI platforms are being built on AI as well so that increases the amount of time and speed that these platforms are popping up and the regulation is still on blockchain and then AI just comes out of nowhere right so I think that's a big thing um I think that's the number one factor to be honest that's really insightful thank you Brandon so we've just tackled the challenges of enforcement and now we're going to drive uh dive into the complex

and highly debated space ai's role in legal and ethical issues so with AI symptoms making decisions in legal Tech this next question is going to be for Rick uh you know with these decisions draft from drafting contracts or generating judgments who holds the responsibilities when things go wrong again we're asking that question so Rick what are some of the issues that you are seeing with attorneys um and other legal practitioners who are using generative Ai and other tools in their in their practice Yeah I think there's so many issues going on that I think any Board of Ethics uh in a State Bar Association would probably puke um unfortunately but the reality is just because there is not clear guidelines which like kind of the

overall theme of our discussion is lack of clear regulations and oversight it's very much the case with attorneys utilizing AI in their practice um you know there's a lot of issues around excuse me client confidentiality uh there's a lot of issues around trusting whatever it is that an AI is outputting in a given scenario um there was a case more recently of attorneys who were using chat GPT uh to formulate a complaint and when they filed the complaint with the court the court came back and said hey um a couple of cases in here that you cited are not actually in existence can you go back and double check your work and of

course the attorney's like yeah yeah yeah you know I'll take it back and and I'll review it so what does the attorney do he goes back to chat GPT and asks hey can you give me all of the information on the cases that you gave me that I filed in my complaint and of course chat GPT made up a bunch of facts and and rules and other things that were for that case and the attorney took it back refiled it again and this time actually got reprimanded for it so um so let that just be kind of a lesson that you know hey as a practitioner make sure that you're double-checking anything that comes out of an AI system that you're utilizing and then again make sure that you're you're you're also being aware that these systems have flaws in them and

they're not to be completely trusted now we could we wake up in a few years and these systems are Crea really thorough answers that are pretty much always correct possibly but even then I still think the most important factor is you need a human attorney at the end of the equation to double check everything that is being output and so that would be definitely my suggestion I mean it's a really tricky balance right with ai's involvement in legal Tech so where do you how do you strike that balance yeah you know it's interesting because I think on one hand there certainly is a lot of efficiencies that AI helps create especially in the legal context you can have it create a a very nice and robust confidentiality clause and it can help you save time on on

certain other kind of more routine and mundane tasks as a practitioner um but really that should be for the sole purpose of being able to free up the human attorney to utilize their time for more um High analysis tasks right and I think if we kind of look at AI as kind of this tool rather than something that can actually replace the practitioner I think that's where we're going to really extract the most value from it I mean these are this is what we're trying to teach college kids and school kids too right so this is something everybody needs to learn but it's a tricky balance for everybody so thank you for your advice on that so we've just touched on um you know the ethical responsibilities there let go and talk about one of the more explosive topics which would be privacy and security um and with AI

tools digging deeper into blockchain Data with privacy regulations like gdpr and CCPA tightening the clash between transparency and privacy is very intense so this next question is for Nick how can AI enhance or complicate compliance with privacy regulations when dealing with blockchain data sure so well first I want to I want to talk about touch on something Rick was talking about with like with the hallucinations and things with the the attorney so uh so as I said I I teach on the side so I was building a new class last year and I just got in my chat gbt uh subscription and so I said hey build me a reading list for this specific Topic in class that I was

covering and it and it generated it Journal you know uh author everything and so I I took that and I and I went to I I teach at NYU I went to nyu's library to to find those and none of them were real none of them so the the journals were real like it they were real journals authors were were not real um the the article was not real it was not in the Edition that it said it was in or the whatever so yeah I had experience like that as well but um yeah so getting getting back to to privacy and stuff like that so I mean I think um when we see AI uh and we see the development of AI we're seeing this like kind of bigger

as better approach so we're we're seeing this kind of like vacuuming of like all of digitized human knowledge and we're we're we're kind of in intaking all of that and to include blockchain and there's a lot of like we're we're sort of doing it in the absence of being told what's okay and what's not so we're just sort of you know the absence of a no is a yes kind of thing and so we are that that's the way a lot of these these companies are are moving forward and we're seeing a lot of complexities and complications from that especially with some of the you know as we know data in transit across borders things like that you know uh jurisdictions that are subject to gdpr and issues and those kinds of issues but this goes back to

what I was talking about with one kind of watching the the trajectory of the the policy and Regulatory environment and also uh kind of looking at what the f like the future proofing of of your of your Solutions and so I'm really glad we kind of talked about this hallucination issue because when you have a a giant uh you know AI model that's trained on the entirety of Reddit and Twitter and forchan and all these other things it's it's kind of like small wonder that you don't get super accurate results or you get these very big broad results and so the way that you know we're looking at AI in my company is is actually like for these much more targeted uh applications and not you know the these big you know

write me a sonnet on what it's like to live in Detroit or something like I mean that's cool and that's a fun thing to do I guess but like if you want to write a briefing or or file a complaint or or if you're dealing with regulated data you can't just kind of throw data around and so I think that we have to think about privacy preserving in a way that is not conceptual we need to actually think about it from the build from the the Builder stage and because and and to take this to kind of a different level if we're going to have a like a kind of a geopolitical conversation about Ai and where that fits in you know the us as a country does not have access to nearly the data pool that you know China has or Russia has or places like that and so if

if we were thinking that we're going to win or lose Based on data you might think that the US has a disadvantage but I would argue that pushing uh Technologies from the very from from the design phase onward that are privacy preserving that are targeted that are deterministic that that are are you know truly tools that help humans and not replace humans that's how we create real value in Ai and we preserve privacy consistent with our values thank you Nick really important points and I'm gonna move on to Brandon actually for this next one we're going to talk about consumer protection because this is an issue that affects every single person in this room and with AI tools like deep fakes the risk for fra and assumtion are very real so you know the question is

how do we protect consumers in a world where AI can create very convincing fakes so my specific question for you Brandon how might emerging Aid driven tools like deep fakes affect consumer protection specifically in blackchain finance great question so first you want to think about a wallet identity as like this is your unique identification personally I don't believe that we'll be using ID cards your your driver's license for much longer you already have to double tap onside your phone to do tap to pay why not just have that to be an ID I personally believe that eventually it'll get to the point to where blockchain is incorporated into every single cell phone device so that

whenever you tap on the side it it'll be more of a safe ID like it may not have your your your personal information as far as your address your date of birth and all that but it will be able to identify that this is you and it's a second it's a two- Factor because it's on your device and you've gone through all these processes to register this device on top of that the fingerprint technology does exist and so we've had that in cell phones before so that'll come back too once all that is tightened up then blockchain is more useful in that capacity to where even when you're posting on social media blockchain is giving you metadata so every single time you take a picture every single time you

drop a video it's tagging that it's gone through three steps of three factors of authentication saying that this came from this person's real unique ID quote unquote that is attached to the blockchain and so then anytime someone were to let's say screen record and then reshare that's not tagged with that proper metadata so it's not being identified so let's say someone's scrolling on social media and they see it you can maybe tap a little icon at the top and check the metadata nope this didn't come from Brandon this it's not checking off those boxes what a brilliant use for blockchain I was going to say yeah I want to Pig you back on that point as well because there's actually a really a good real world use

case going on so I sit on the New York State Bar association's task force for emerging technology and assets and one of the things that's going on as a test pilot case is for utilizing blockchain metadata for police body cams because we're seeing you know there's been some cases where you know parts of maybe a police body cam video gets missing or it's altered in some sort of way and certainly now with the Advent of AI coming into the picture you could really alter what's going on in some of these videos and to Brandon's point but if you're able to create a hash on a blockchain and tag that specific video at the time that it's created you would be able to verify that against any alterations modifications to where you

can always go back to that original video and detect what it is versus maybe possibly a duplicate or another video that's been altered so to brain and point I I definitely think that that use case with the technology is going to really start taking uh you a footing really really quickly I'm going to add add to that as well and I the digital identity thing I think was was such an important point that you just made and when I was at uh Department of Fel security we we actually really kind of went down the road on looking at this because the real ID program is actually owned by DHS and so that was something that we were working at and and the the history here is really interesting because your driver's license was never intended to be like an an identification mechanism and like my parents remember

when it was paper and it didn't have your picture on it and it was easily fak right and so we've gotten kind of a little bit better but the real ID Act was actually after September 11th and we've only just within the last like two years gotten to where that is actually something that's enforced and so creating a an an identity that is actually fit for purpose and is meant to be an identity and is on the blockchain um would be an amazing uh an amazing development especially in all of the fraud that took place um with the covid Relief act there was a study on that that said had there been a digital identity there would have been billions of dollars that they would have been able to kind of detect and not kind of distribute in that fraud and so the the

digital identity use case is one that I'm a very big believer in and I think is is such an important application and I hope that we can get to a place where that is something that we can get behind absolutely and actually it reminds me of you know the originally the the concept of black as we know it was built on a concept by stornet right um and the concept of how do we verify that digital documents have never been altered um and then from that came the Bitcoin blockchain so we're kind of really going back to that uh which is fascinating so um all right Brandon what role do you see for blockchain in verifying the authenticity of AI generated content like deep fakes and what challenges do Regulators face and preventing

fraud yeah so again there are a lot of companies out here that want to sell the Deep fake technology like the voice changing companies there's AI for music the video AI there's really no way for you to be able to regulate it 100% but someone has to hold the liability so these companies that are putting out these products are going to have to be held liable for what they're putting out that's the only way because if I'm for example I was using chat gbt the other day and I asked it to created a character um of the Monopoly man for something that I was creating for a graphic and it told me no it said you don't have the trademark um license for

this product but if you want I'll create something with similar Li interesting and I said I said sure go ahead and do that and it made the Monopoly man it was just it just gave me the Monopoly man yeah a Monopoly man from wish yeah but his head was a little bigger or mustache was a little longer oh that's funny you know so so I think that when it comes to deep fake and regulation as far as the time that's it's going to take it's just a matter of someone had like these companies have to know that they're liable and just hold the liability of everything so I mean like my grandmother for example I called her and I said if anyone calls you and says that they're me they're not me you have to call me back I don't know if you guys remember

back in the day they used to be able to actually call you from another number back and then they canceled that whole project so I'm glad they did that but that's a dangerous thing because if she sees that my number is calling that's already a flag there but again the blockchain incorporate into the cell phone idea is another way to kind of solve that idea if everything just runs through that real identification system if it has to check off all these boxes then you could kind of alleviate some of that because deep fake technology is is not necessarily new like it's just being streamlined a little bit more efficiently now so absolutely and I think there's a lot of room for specifically zero knowledge proofs to come in and help with that so these are

brilliant applications for blockchain thank you Brandon 100% we're going to move on to mark for this next section I want to talk about Dows and legal structures just a bit so um you know as Dows evolved do you foresee any existing legal Frameworks that could be adapted to better fit decentralized autonomous organizations or is it really entirely new laws that we need to make for it it's a bit of both so we talked previously about how when a DA is facilitating some sort of conduct The Regulators and private citizens who have allegedly been harmed by that conduct are using existing regulatory schemes and existing bodies of law to try to

achieve a recovery or a modulation in the conduct now at the same time Dows are also facil I can talk way over that Dows are also facilitating new forms of justice and I have been writing and speaking about this for several years now and companies are starting to come into the picture to present platforms to achieve decentralized Justice such that the litigants would not need to submit their dispute to a court would not need to have their disputes uh determined by judges who in reality many times are not not as fasile with some of the emerging

technological Trends as the folks who are subject to the judge's orders and so Dows as a mechanism to at a communal level all agree on a programmatic self-executing pre-wired methodology of dispute resolution is something that has a lot of promise for the community if for example all of us in this room decided that coming out of this meeting we had a great idea for a concept we could all get together and say we're not only going to work on this concept but if something should go wrong here are the rules of the road around how a challenge or how a question or how a dispute is going to get sorted out and

if we all agree at an Institutional level that those are going to be the governing features of any dispute resolution process and we pre-wire it right into the self-executing uh computer code that's the way it's going to be and so that is an example to your question Elizabeth of how there is a fusion of both existing principles but also it's not just a a risk area this is an area of opportunity these technologists are giving us the ability to take justice into our own hands not in a vigilante way but in a self-empowering way that has a lot of promise for both the country as a whole the world as a whole and then each siloed community based on

their own parameters and preferences thank you Mark and this next question is for Brandon specifically in terms of governance and decision-making how do you think AI driven Dows could revolutionize the digital art space horribly bo be honest say I mean it's dangerous so here's the thing every if let's say that you allow AI to represent you as a person okay that's essentially what this looks like otherwise you have all these AI characters that are just voting on behalf of no one that are just making decisions so essentially you could spin up an entity and send it out into the world and let AI just and like oh I don't I'm not responsible that was

the AI so then then what but if you allow it to represent your likeness let's say you have to go through some sort of programming to where it's like okay you put your answers this is me this is how I would respond to this here here are my viewpoints here's my stance I'm red I'm blue I'm whatever and then yeah okay so if I'm not present if there's a deadline or I need to be able to vote on this in order for my vote to count by this date go ahead and just opt into the AI if I'm if I don't vote on this matter by this date the AI will take over on my behalf whatever the answer is I'm happy with yeah and it's tricky because you know the issue of you don't know what biases they're going to use in making those decisions right so

we've touched on that a little bit so very interesting to hear your perspective thanks for sharing that for sure all right so we've covered everything from compliance to consumer protection and we've explored the legal Frameworks shaping Ai and blockchain but now we're stepping into the future so blockchain and AI they are shaping the future in ways that we can barely imagine and the choices being made right now will really have a big impact so let's talk to Nick about where these Technologies are headed and what that means for the world stage my first question for you is given your experience and Advising on emergency emerging Technologies and geopolitics how do you see AI shaping the global balance of power well I you know you can go to any number of of

speeches documents things like that from a lot of different leaders and and and countries around the world and you know Vladimir Putin said that you know the one who leads an AI is going to rule the world and you look at some of the you know the the the China's fiveyear plans and made in China 203 2025 and these different documents they all reference a a a the you know data and and AI as a kind of a a geopolitical um lever and then you look at some of the things that are going on with state sponsored intellectual property theft and so we're seeing as as a not hiding as a as a public matter we're seeing uh China do things that are are specifically

targeting kind of these early stage developers who have these new innovative ideas who are not prepared to kind of defend against a you know a Cyber attack of that that sophistication and so what we're what we've entered is an era that is really defined by emerging Tech AI being obviously a central part of that and so you know we in in previous eras we had you know kind of eras dominated by non-state actors we had the Cold War we had you know uh things like this where where we we all sort of knew what the geopolitical landscape was made up of now it's really built built around emerging technology it's it's the you know R&D the operationalization the

monetization of these emerging Technologies but they're also instruments of state power and so this goes back to the the convergence conversation from earlier you know AI we we can do a lot of different things on the kind of National Security Homeland Security stage with AI it's not AI alone but it's AI integrated into something else converging with something else and so I think that one of the one of the things that raises you know my you know alarm bells for me is the intellectual property theft issue because we're seeing it in terms of cyber attacks we're seeing it by live people being sent here um and that that competition that's the new kind of um geost

strategically valuable commodity that we're competing over and we're we're seeing you know there's there's a lot more to this but we're seeing state sponsored um activities against this and they're particularly uh targeting you know those those kind of like small early stage companies and developers because they're the ones that have the innovative ideas and so it's no longer kind of sufficient to say well you know I'm just somebody in my garage you know tuning up my new nft protocol or whatever you you have to think that no you have something that's valuable and you might be a Target and so it's it's important to kind of understand that what you're building does have that implication as well so do you think the

AI could become some sort of arms race between nations similar to what we saw with nuclear weapons yeah and in a sense in a sense it is but I again I I go back to I think I think one we have to talk about kind of what what do you need to be good at AI so you need data we talked about that earlier you also need compute right and you need things to integrate it into and so there's arms races kind of around I would say those first two already so compute data you have to have the workforce for it right you have to have people can do it there's there's absolutely kind of a race around that and so like I would hesitate to use the term kind of arms race because that's very that sounds very militaristic and

that's not I think the right way to kind of think about it but I do think we're we're seeing a race for dominance in what will be a an instrument of National Power and so um AI will absolutely be that but I would I would put some other Technologies in that category as well like Quantum Computing for example um would also be um a an instrument of state power potentially more impactful even than AI so do you see governments actually coming together to collaborate especially in terms of compliance and enforcement that would seem so tricky across borders so you do see governments coming together but on the compliance issue um I I my experience is um we're usually pretty far apart on a lot of those conversations and so uh when when

I was a DHS the EU AI Act was was being kind of shopped around and every every time we had a meeting with a minister from some country they wanted the talking point in there that we should tell them that the eui ACT is bad and you know after a while it was like do do you think they're listening to us they're not right that's that's their Sovereign law right we're not going to tell them how to write their Sovereign law and so um we were we were really far apart on that because there's there's some pretty big um ideological differences um but I think there are not fundamental and values based differences that I think we do share and and to me if if we share that we can get somewhere

and the example I'll give is the EU AI act calls any use of AI by a law enforcement agency high- risk and so DHS being the biggest federal law enforcement agency in the country would push back on that pretty hard but that is something we can come to we we we can figure out how to come together on something like that but as long as we believe that you know building bu it within our shared Democratic Values protection of privacy things like that which despite some of the fights we actually do share that um but we just we we take very different approaches to it so yeah yeah please um I just want to kind of add on to to Nick's Point as well and kind of zooming out a little bit I I don't know if anybody in here has ever played the Metal Gear Solid

video game series um but in Metal Gear Solid 2 which by the way came out in 2001 uh there's a conversation and it's gone viral on YouTube most multiple times over the years because of just how much of a stark picture it actually ended up creating of how our AI systems and social media systems are today and to Nick's point is so in in the game itself it talks about that how a lot of businesses and highlevel governments eventually started to become ran by AI systems themselves and in a way that supposedly at least according if you ask the AI in this context is kind of our our Gatekeepers right they look out for our best interests they realize what's best for us as as a society and as a species but what you quickly realized is

they really did not have our best interest in mind because in a lot of ways human beings sometimes don't have our own best interest in mind and so we have to be very mindful of you know as AI continues to grow into scale you know there's a story I think it was in Japan where a company has its CEO as a AI uh bot system and so I think as we kind of grow and expand and there's kind of this tug and pull as that kind of talks about of you know regulation coming in but still allowing for these systems to grow and Thrive um it's just something to be kind of mindful and careful of especially on a cross-jurisdictional basis so just want to throw in that tidbit as well thank you thank you Rick and this is my last question for you Nick and the last question of the

evening before we do a Q&A so just briefly um you know this is maybe a bit of morid curiosity but uh you know you advis the White House right on National Security implications of AI and emerging Technologies and these are National Security risk is obviously a major Focus for policy makers so can you share with us maybe some of the most surprising or even unsettling risks that AI could pose to National Security in the next decade yeah I and and I think when when this question is asked there's frequently you know people will go to kind of the like the the the traditional hard military power sort of application right the autonomous AI swarm that's going to you know attack the Navy ship or something like that and that that stuff's true and

I I don't I don't mean to kind of belittle the the you know the autonomous weapons part of this but I mean I think that if we look at just just the damage that we've seen especially to to our country I think it's it's in the spread of misinformation and I think that's the thing if you look at a lot of a lot of what's going on we're we're doing a lot of things to ourselves and it's really a result of the ability to create generate and distribute false information that we have a hard time kind of not you know disbelieving and so it's really created like we have now a a bad relationship or a kind of a rocky relationship with the truth and it used to be you know if I if

I put you know a like let's say a letter A Written Letter in front of you and like how do you know that it was from me well you would need to know my signature or something like that or have some reasonable confidence that like somebody didn't Forge it if you heard my voice you could probably assume it was me I mean maybe maybe you could be mistaken maybe there's somebody that can do a good impression of me although I don't know why someone would work on that but you know but but there was there was some doubt there but if you if you saw me like if if you saw a video of me a picture of me or something like that it used to be we could say that's def that's defin yep Nick was definitely in Detroit on that night right but we've

even taken that away now we we don't have confidence in in visual anymore we don't have confidence in audio we don't have confidence in written uh and so and so what's left what's what's left when we when we need to gather information you know about something like an upcoming election or even a technology capability or something like that what's left and so I think that the thing that's that's been the most damaging is is what is the distribution and creation of of misinformation and then what it has kind of created and what we've sort of done to ourselves as a result excellent answer thank you for sharing your insights and I'd like to open this up to the audience for a Q&A and I think if you just use a nice loud voice we'll be able to hear you I might reiterate it

for the microphones but uh I also have some prizes to encourage participation um I have a web three book from Alex Tapscott he is a bestseller I have a chain link t-shirt and so if anybody wants to raise their hands so back to uh geopolitical risks that you were discussing I was wondering what is being received of or discussed as far as making sure that AI kind of like spits out the answers that we find amable you can see a situation use China as an example where it uses all its data and the last thing the Chinese government wants is for when someone types in the question in bu do GPT you know what is the best form of government

it spits out multi-party you know representative democracy so in that guys I mean what is being already discussed conceived of to make safeguards that make sure that the questions and answers that we're getting are meable to our society beneficial well I think what I I would I would amend that just a little bit to say I don't think it's it's I wouldn't say it's amenable as in something we like but it's again going back to that kind of like relationship with the truth like we can believe that what is coming out is a truthful uh response based on the data that is trained on right like that's that's the thing we want and that is kind of the pursuit of deterministic AI and so when you ask if we opened up chat gbt right

now and we asked it a question and it gave us a question and then we asked it the same question again we would not get the exact same response you know or same thing with an IM image if we wanted it to create an image it would not create the same image twice and that's because it's not deterministic right it's probabilistic and so what we need to do is have ai that well I mean not for for for for a chat gbt uh you know um application that is fine but for for a lot of these you know kind of more targeted cases legal cases regulatory National Security things like that you need deterministic Ai and so that is one way that we can start to get from a technical perspective that we can start to get toward that another one is governance and this is this is something

that I could talk about for a long time because we did this at DHS but creating a governance structure that kind of asks the right questions and has the right controls in place so AUD auditability transparency of data um you know being able to go back do and explain kind of how the algorithm got to where it is those are things that are achievable and and those are things we should put in place and our our governance structure should be asking the right question which is not can I use AI right like it's a you know a laptop or a phone but should I use AI for this application and if yes under what conditions and then it is empowered to put the conditions in

place to then govern what we're seeing and so I think those are the ways that we get toward that and the governance uh piece is very uh forward in the minds of the government of government folks um but still still it is still developing thank you so much neck I appreciate that and I'm gonna actually give the microphone is that that is portable great uh you want to stop up here for just a second so that the recording pick it up so I got a question about sorry so SO2 orc2 compliance so like you're talking about data governance so wondering like yes that there's traceability like you you have Trace um you you could do Trace when you make requests and so you could track it

through the algorithm but my question is s so s SO2 compliance what's missing in data governance and AI compliance compliance wise yeah so I think it is you know it's it's about um you know provenance of data I think you know kind of understanding the initial state of the data set that you've got um and then uh you know the security protocols around you know when the AI reaches into that into that Lake of data what what occurs what what security Protocols are around that that protocol or around that that um that action and so I mean I think there are a few things that are are missing because as we are dealing with

bigger and bigger data lakes and we are analyzing them in different ways um we have to amend things like sock 2 um and so I think that is something that we'll we'll continue to see evolve and I think one of the things that has that has really I guess made this more important is some of the debates about what the bigger uh kind of the big box AI companies are doing like Facebook was literally going to buy a publishing house just to get more data to put into their large language model and so looking at things like that and and understanding the volume of data you know you can make a really good argument that our our kind of governance or security or risk protocols around data

are actually outdated and maybe not useful and so you bring up a great point about you know trying to um bring that into alignment and then from that you would see um changes probably to regulatory regimes as well thank you and we'll take one more question yep we'll do two we'll just try to get answer thank you so I often like to say privacy like a window and I hear you with the real ID and also but also maintaining our privacy so how do we navigate that moving forward I know that's kind of an open-ended question but a great question great question so I feel like

if you have any sort of social media with your picture on it you're already out of the loop on that Facebook yeah okay Facebook Instagram um you know I don't believe that decentralization is for everything there are also centralized blockchain platforms that are very useful and I think that for something like this that would be useful for that use case all right we have H one other question in the back actually can you step to the micophone so I'm in um blockchain technology in

terms of real estate right and utilizing that um I know that your attorney lawyer right I wanted to ask questions in regards to um how you perceive regulation surrounding that in particular right um how regulation is proceeding from your perspective in terms of blockchain integration with real estate U and other Innovations in terms of that industry yeah that's a really good question and you know when we talk about you know rwas and and integrating blockchain technology into you know

existing paradigms like real estate and maybe you know perhaps other you know Security Instruments I think the tough part is at least with real estate in particular is we have so many different existing regulatory Frameworks at both the state and the federal level that you have to abide by with real estate that even if the technology itself work which look in the context of real estate the main idea is to create uh you know liquidity for you know traditional you know assets that are traditionally IL liquid right and even if you can obviously solve that and you can create liquidity which again I don't think the industry is really even to that point yet but let's say even if you could the regulations behind it really stipulate

that in most circumstances like if you tried to fractionalize a piece of real estate those pieces that you fractionalize are now Securities which you know really here in the US you have accredited investor laws that basically stipulate that unless you are an accredited investor you really can't participate in the buying and selling of these fractionalized Securities which if you think about it obviously blockchain the whole point of it is to create liquidity to create larger marketplaces for more Market participants right but you have to obviously balance that with consumer protection but at the root of it I would say the technology is there but there's external Market factors as well as existing regulatory regimes that unfortunately I think are not necessarily allowing it to thrive at

this stage yeah and think con how does that perspec Knology come together yeah I definitely think you know for myself you know I'm

of the opinion that I think it's great that we have more ways for people in the marketplace to participate in Investments you know it's interesting you know we have in one hand the ability for people to gamble away their life savings on a football game but when it comes to you know buying stock in a company you know we have a lot of gatekeeping mechanisms in place and and I think it seems really counterintuitive and I think in my opinion a lot of the laws that we have in place really should be more focused on investor education levels and how well they understand the risk of Investments and things like that whether it instead of it just being currently kind of more of a high you know of a net worth test right um I think I know some of the smartest people that I know when it comes to investing

you know they probably wouldn't qualify as an credit investor but they're absolutely brilliant so um I definitely think you know a lot of these regulatory Frameworks should at least be at minimum tweaked again you have to have some Protections in place for consumers uh but we definitely need a little bit of changing as well Mark any thoughts on this as well very briefly so so you brought up reg CF and I think there is sometimes a misperception in the community that Reg CF can be done in an extraordinarily streamlined way I was on the phone with a client over the weekend and they were telling me how expensive even doing a reg CF was so it's kind of ironic when even the systems that are supposed to be

more simplified still have a high degree of complexity the one other potential hack or workaround in the real estate context in particular is if you could structure this is in part jumping off the question in part jumping off your comment Rick but if you could structure a fractionalized interest in real estate where the appreciation was going to have nothing to do with any active management but was just going to be a function of pure Market appreciation that might be a function where you could get around some of the existing Securities constraints am I inviting a followup well I was just going to say to your point mark that some of the issues

that kind of crop up with kind of crafting these Solutions is a lot of times you have to have you know owner occupied housing and obviously if you have you know a fractionalized piece of real estate with a 100 you know owners you can't have a 100 people living in a house so you know and that's kind of what to my earlier point was is that there's so many different rules and regulations in place that really unfort are just kind of prohibitive of allowing you know the use case of this technology that and really to to Mark's Point could really you know creates some really new Innovative financial instruments to come into the fold um but it kind of prevents that from happening at least currently but you know I'm optimistic and hopeful um that things will change thank you thank you gentlemen and

you know I wanted to host this event because as a builder in the space I've come to realize how critical it is that we have policies that are working to maintain blockchain's decentralized nature the choices that we are making today about Ai and blackchain regulation aren't just about technology they're truly about power Global power National Security personal sovereignty and the fundamental rights of individuals and at the heart of this struggle is decentralization and this isn't just a feature decentralization is not just a feature it is the foundation of freedom decentralization means no single entity controls the future of Finance Identity

or innovation it means empowering billions around the world not a handful of Gatekeepers if we surrender this we risk a world where control is centralized where freedom is a luxury and where Innovation becomes the privilege of the powerful the stakes are high and that's why conversations like tonight are so critically important so thank you for spending this evening with us this was really enjoyable I hope you enjoyed um it as much as I did so thank you to our fascinating panel of experts for sharing your insights I'd like to give you a round of applause I'd also like to thank those who are listening from our live stream thank you for joining us tonight I really hope you enjoy the evening and if

anyone is ever interested in participating in an ethereum Meetup with me please reach out and I would love to collaborate thank you very much