Coinbase CEO Brian Armstrong Rejects Calls for a New AI Regulatory Body

Armstrong believes market incentives encourage AI companies to build safe products without the need for an additional regulatory framework.

Coinbase CEO Brian Armstrong has rejected calls for a new AI self-regulatory body, arguing that existing laws already provide enough protection against harmful AI.

His remarks came just a day after the crypto exchange disclosed that AI now writes over 95% of its code, more than twice the figure the company reported earlier in the year.

Armstrong Says Existing Laws Already Cover AI Risk

It all started with a proposal from Google DeepMind CEO Demis Hassabis on July 14, where he called for the creation of a federally overseen standards body to test and certify frontier AI models before they are deployed.

According to him, artificial general intelligence could arrive within a few years, with increasingly capable models possibly introducing cybersecurity and biological risks as well as a multitude of national security issues. He therefore proposed a public-private organization, much like the Financial Industry Regulatory Authority, that would at first conduct voluntary reviews before potentially moving to mandatory testing for the most advanced AI systems.

Reactions from Hassabis’ peers were quick, with tech entrepreneur Chamath Palihapitiya calling the framework “quite well reasoned, and OpenAI’s Sam Altman describing it as “a thoughtful proposal.” Microsoft CEO Satya Nadella also chipped in, calling it “an important piece” and adding that the goal should be to avoid “any model that breaks the world.”

However, Armstrong disagreed, maintaining that such arrangements often create a dual approval process that forces businesses to satisfy both state regulators and industry bodies. He insisted that AI needs neither an SRO nor a government watchdog, since, so far, there has been no harm done that couldn’t be compensated.

“Why design regulation around a hypothetical problem,” the crypto chief posited. “The existing laws which prevent fraud, award damages when victims are harmed (tort), UDAP Laws (Unfair and Deceptive Acts and Practices) etc provide broad protections if one of the frontier labs issues a model that does harm.”

Furthermore, he pointed out that AI developers also have a strong commercial incentive to release safe products since users will most likely avoid tools they consider dangerous.

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Coinbase Doubles Down on AI Across Its Business

Armstrong’s interest in the direction of AI isn’t a passing fad, considering the company he heads has deeply embedded AI use in its processes.

This was revealed by a colleague of his, Coinbase’s head of platform Rob Witoff, who recently told Cointelegraph that between 95% and 100% of the crypto exchange’s code is now written by or with large language models, more than doubling an estimate the company shared in February of roughly 40%.

Recall that in May, the exchange announced a 14% cut of its workforce, with the intention being to reorganize around smaller, more experienced teams with AI at the center of its operations. According to Witoff, AI usage on Coinbase varies depending on the task, with sensitive areas such as cryptography still getting detailed human review while internal prototypes can be built almost entirely through automation.

Other crypto firms, including Gemini, Crypto.com, Kraken, Messari and Dune, have also reduced headcounts this year while expanding on AI use.

But that rapid AI adoption has not been without a few setbacks, as seen earlier this month, when Coinbase was forced to investigate an AI-generated notification that incorrectly reported the result of the FIFA World Cup match between Norway and Brazil before the match had even started.