Author: Calanthia Mei Source: coindesk Translator: Shan Ou Ba, Jinse Finance

From the Industrial Revolution to the digital age, the United States has always been known for its entrepreneurial, innovative, and creative spirit. The American entrepreneurial spirit has been a magnet for talent, attracting global talents, including myself, to start businesses and innovate in the United States. 65% of the top artificial intelligence companies in the United States were founded or co-founded by immigrants.

For decades, technological advancements in the United States have been a major driver of global innovation and leadership, with other countries around the world also adopting these groundbreaking technologies. However, the United States is now facing a potential threat to its dominance - once an undisputed leader in technological innovation, the reputation and status of the United States are now being challenged.

While the United States currently remains a leader in artificial intelligence venture capital, in May 2024, PitchBook released a report showing a sharp decline in early and seed stage financing for generative AI companies in the United States, while companies in Asia and Europe have been steadily growing. Yes, we have seen this situation before in the field of cryptos.

Cryptocurrency was once the technology that propelled us into the Web3 era, with high hopes pinned on it. But due to the hostile regulatory policies in the United States, it has been stumbling. The country's actions - or rather, inactions - force us to think: If the United States continues to falter in the wave of new technological innovations, how will it maintain its global technological leadership position? For AI innovation, we must not let the United States fall behind as it did in cryptocurrencies.

The Decline of Cryptocurrency in the United States

The rise and fall of cryptocurrencies in the United States is a cautionary tale that lays the foundation for the future of AI. In the early days of cryptocurrencies, the United States was a land of hope, with a large influx of startups and investment funds into the sector, creating space for innovation, growth, and widespread adoption. In recent years, this process has slowed down due to a lack of regulation and policies. The U.S. Securities and Exchange Commission has started legal actions based on previous cryptocurrency laws and regulations - essentially trying to fit a square peg into a round hole. They are targeting prestigious companies in Web3 like Consensys, Coinbase, Ripple, just to prove... what? The lack of clear policies and regulations hinders progress, forcing these companies to spend resources on legal battles while pushing companies and talent elsewhere to continue their dreams of decentralization.

Not long ago, OpenSea received a Wells notice from the U.S. Securities and Exchange Commission (SEC), which considers NFTs to be securities. Although we must monitor the progress of this and many other events to determine what regulatory actions the SEC will take against these companies, this is a sad but perfect example of how the United States stifles the development and innovation of cryptocurrencies through its policies. Meanwhile, governments in jurisdictions like Switzerland, Singapore, and Hong Kong have embraced cryptocurrencies, leveraging their forward-thinking cryptocurrency policies to compete for coveted positions on the global tech leaderboard.

Let's take a look at the comparison. Singapore has established a strong regulatory framework that benefits both local and international participants in the country. Singapore took swift action and implemented the Singapore Payment Services Act in January 2024, providing clarity to the industry and legalizing cryptocurrencies nationwide. Today, Singapore has emerged as a global leader in cryptocurrencies. In the first quarter of 2024, companies headquartered in Singapore ranked second in cryptocurrency trading volume, just behind the USA, with projected cryptocurrency market revenue for 2024 reaching $0.2385 billion.

Other leaders in the cryptocurrency industry have also shown similar policy implementations. Switzerland regulates cryptocurrencies through the Swiss Financial Market Supervisory Authority and has introduced the 'Blockchain Act,' attracting over 1,000 new companies to the country. Meanwhile, Hong Kong, an interesting case, does not have official cryptocurrency laws but does have cryptocurrency regulations. They have also approved ETFs before the USA, providing regulated capital channels for the cryptocurrency industry.

The US position on artificial intelligence policy.

Therefore, the US position on cryptocurrency regulation has been evolving, but as of last year, artificial intelligence has become a focus in the technology sector. Let's delve into the US stance on artificial intelligence regulation to date.

Artificial intelligence policy seems to be following in the footsteps of cryptocurrency policy, with similar challenges arising between the two industries. Currently, the US remains home to most major artificial intelligence companies and research institutions. The risk lies in the current and proposed regulatory frameworks in the US likely constraining the development of the artificial intelligence industry.

Let's use Singapore as an example again. Singapore has been focusing on maintaining a leadership position in artificial intelligence and drawing attention. Its successful formula seems to be working once again, as the country has set guidelines for building responsible artificial intelligence, promoting continuous innovation, and developing a balanced strategy.

Compared to other major technology trends, the pace of artificial intelligence innovation is unparalleled. Developers are introducing new products, features, and applications every day. As developers, we don't even know where the limits of artificial intelligence are, so how can the government? Restricting high-potential technology is unwise and will drive talent out of the USA (similar to what regulations have done to cryptocurrencies).

In fact, small artificial intelligence will bear most of the regulatory burden for artificial intelligence. Unlike larger artificial intelligence, which has lobbyists collaborating with regulatory bodies, small artificial intelligence simply lacks the capacity to handle regulatory burdens and costs. Small artificial intelligence is now tasked with building and exploring the forefront of artificial intelligence innovation.

This is particularly true for ai: unlike past technology trends, developing ai now requires less manpower and resources. Many individual developers are launching cutting-edge ai products. Many open source communities are exploring the forefront of ai. We simply do not have the capability to handle regulatory burdens, especially when the future of ai is full of unknowns.

Lessons from cryptos

In-depth study of singapore's regulatory framework in cryptos and ai can provide guidance for the usa, which is also why singapore has become a center for these two industries. Singapore does not stifle innovation through regulation, they are mutually beneficial. The usa must learn from other countries in order to maintain a leading position in ai. Ai regulations need to be flexible, fair, and should not be formulated to stifle innovation. Current and proposed regulatory frameworks in the usa focus on addressing the problems and solutions of large ai companies (OpenAI, Claude, Midjourneys). For example, the recently passed california bill SB 1047 is awaiting governor newsom's signature, it is one of the most important regulatory frameworks for ai security, but these efforts feel somewhat rushed, disproportionate to the unprecedented growth the industry will continue to see. These one-size-fits-all regulations harm smaller ai (or small ai) companies, creating a system that is unfair to both institutions and consumers.

Looking ahead, policymakers need to consider ai comprehensively, with a focus on flexible policies to avoid hindering innovation. Politicians should advocate for the development and innovation of ai, because if done right, its benefits far outweigh the drawbacks. As Dr. Fei-Fei Li pointed out, overly strict regulations could harm the ecosystem in the usa. On the contrary, creating an environment conducive to innovation will help maintain the usa's leading position in technology.

Conclusion

Overall, ai is different: innovation is faster, and we don't know what we don't know. Ai requires less human involvement, sparking a wave of independent developers and independent source code communities globally. In terms of its impact in the technology field, the usa undeniably holds a leading position, but if its recent track record continues, this could be the beginning of being deposed. The lessons from the cryptocurrency craze should serve as a warning: the only answer is to responsibly formulate policies that do not hinder innovation or progress. I'm not saying it's easy, but it cannot be ignored. The november elections are approaching, with ai and cryptocurrency platforms drawing close attention. Ai will continue to evolve. So, can the usa keep up?