Artificial Intelligence (AI) is the new technological frontier, changing everything around us at an unprecedented pace. The same is true for the digital asset space. AI’s new capabilities are developing at an unprecedented pace. This explosive development is raising many of the most urgent legal and ethical discussions to AI, copyright law, and the practices and policies supporting crypto and NFTs. In this piece, Li Wei unpacks how these debates, whichever way they go, could radically affect the attractiveness of crypto and NFT investments by 2025.

The AI Copyright Conundrum

At the center of the dispute is the question of copyright. AI companies argue that their models are not relying on copyrighted works for the purpose of creative expression. Instead, they learn the underlying patterns and structures within the data itself. Finally, people are pushing back on this incredible and absurd argument. AI is now incredibly sophisticated and able to create original content that imitates or even amplifies preexisting works. The central debate here is whether it’s fair use to use copyrighted works in the datasets used to train AI models. Further, most content owners view this practice as infringement.

The existing legal framework is having a difficult time catching up with these rapid technological developments. Current copyright law was designed for a non-AI world. Yet today, it confronts challenges unlike anything its architects would have ever imagined. As of 2020, almost 40 copyright lawsuits have been filed against AI companies within the US. Unfortunately, this surge highlights the growing antagonism between AI developers and traditional content producers. Add to this the US Copyright Office’s recent report throwing more gasoline on the copyrightability fire with respect to AI, and this issue has become quite a hot topic. They claim that current law can answer these questions, but many in the creative community are still unconvinced.

A few content holders have been proactive about this, and by licensing their content directly to tech companies, they’ve gotten ahead of the curve. This will put AI developers in a position to exploit their work in an orderly and financially rewarding fashion. This approach has yet to find universal adoption. Many creators still feel uncomfortable granting permission without clear guidelines and other safeguards established. This lack of a clear and consistent legal standard creates confusion for AI companies and content creators alike. This creates confusion that leaves them ill-equipped to proceed through the rapidly changing, complex environment.

Key Legal Battles and Their Implications

Together, the decisions in Andersen v. Stability AI and Getty Images v. Stability AI promise to redefine copyright law applicable to AI-generated content. Take, for example, these cases that can help set critical legal precedents. No surprise that both the tech and creative industries have been watching these cases with keen interest. The results might influence how AI companies utilize copyrighted content to train their models.

Each time, the judges ruled against the plaintiffs. A US District Judge dismissed the 2020 case against OpenAI. The judge concluded that plaintiffs failed to demonstrate that they suffered any harm as a result of OpenAI’s purported copyright infringements. This decision illustrates the challenges of proving direct harm in AI copyright infringement suits. This obstacle is especially acute when the AI-generated output is not a carbon copy of the underlying creation.

The good news is that the music industry is mobilizing. Just a few days ago the Recording Industry Association of America (RIAA) filed lawsuits against AI companies alleging their new technologies infringe on music copyrights. These examples indicate the far-reaching consequences of the ongoing copyright fracas. It’s not just limited to the visual arts and literature — it’s having ripple effects on all forms of creative expression.

AI in Crypto: A Double-Edged Sword

Copyright concerns, in the age of COVID-19, are influencing that legal terrain. At the same time, nothing is proving more indispensable in the crypto space than AI. Today, AI is fighting fraud in crypto transactions, predicting new trends in the market and even creating new dApps—decentralized applications—to replace existing apps. This presents a double-edged sword: AI offers the potential to enhance the security and efficiency of the crypto ecosystem, but it raises new questions about data privacy, algorithmic bias, and the potential for malicious use.

Projects such as Fetch.ai and SingularityNET are already tapping into AI’s potential. Like the above projects, they are creating decentralized marketplaces, intelligent agents that automate price discovery, task completion and more in the new crypto economy. Each of these projects represents an exciting use of AI to open up possibilities in DeFi and NFTs. They do an admirable job of providing clear and strong ethical frameworks. Smart, effective regulatory oversight must ensure responsible AI is used while not exacerbating current risk.

Navigating the Regulatory Uncertainty

The AI copyright debate is a confusing, quickly changing landscape. Because of this, investors in crypto and NFTs are at a serious disadvantage. Everything is still in flux, and the regulatory space is dynamic and developing. We know lawsuits are never-ending, but ongoing litigation could greatly impact the worth of digital assets. In response to this uncertainty, Li Wei proposes some actionable strategies for moving forward.

  1. Diversify Portfolios: Don't put all your eggs in one basket. Diversifying your crypto and NFT investments across a range of projects can help mitigate the risk associated with any single legal outcome.
  2. Monitor Legal Developments: Stay informed about the latest developments in AI copyright law. Follow industry news, legal blogs, and expert commentary to understand the potential implications for your investments.
  3. Identify Projects with Robust Ethical Frameworks: Prioritize projects that demonstrate a commitment to ethical AI development and responsible data handling. Look for teams that are transparent about their AI practices and actively engage with the creative community.

The Future of AI, Copyright, and Crypto

The intersection of AI, copyright, and crypto/NFTs should be a major battle ground in 2025. The current litigation will soon bear fruit. These outcomes will help set the groundwork for the evolving regulatory state and provide more certainty for generative AI developers and content creators.

At the end of the day, much broader societal issues will drive what happens with AI and copyright. These issues are actually bigger than any discrete legal victory or loss. Concerns about technological competitiveness, labor-market disruption, and the original purpose of copyright law will all influence how governments and courts approach the challenges posed by AI-generated content.

Legal experts and professors are actively weighing in on how copyright law should evolve or be applied in the context of AI. Some, including the American Public Works Association, call for a complete reimagining of the existing framework. Some believe that we can take our current laws and reapply them to solve the distinct challenges that AI presents. The fight is still underway, and whatever the outcome, the decision will have a long lasting impact on the future of creativity and innovation.

Ultimately, a nuanced understanding will be key to making sure AI doesn’t run amok with copyright. This is especially true as new technologies, like AI, unlock amazing opportunities for innovation and drive economic growth. It also poses enormous dangers to copyright owners and the creative economy. It’s enormously important that we get this right. We also need to safeguard against infringements on the rights of creators to promote a healthy and flourishing digital environment.