Welcome to the CAVEAT Weekly Newsletter, where we break down some of the major developments and happenings occurring worldwide when discussing cybersecurity, privacy, digital surveillance, and technology policy.
At 1,750 words, this briefing is about a 7-minute read.
At a Glance.
- Trump ends several prominent crypto company investigations and lawsuits.
- Pentagon signs new AI deal with Scale AI.
Trump Walks Back US’s Crypto Crackdown.
The News.
Last week the Securities and Exchange Commission (SEC) announced that it will be pausing a series of lawsuits and investigations into major cryptocurrency firms. These actions included dropping a lawsuit against Coinbase and ending investigations into Gemini, OpenSea, and Uniswap Labs. Additionally, the SEC also requested a federal judge to pause a significant fraud case against Justin Sun, a crypto entrepreneur. With these actions, Mark Uyeda, the SEC’s acting chairman, stated that the agency needed to “rectify its approach and develop crypto policy in a more transparent manner.”
These latest actions follow a similar pattern that has emerged over the past several weeks. Since taking office, President Trump has also closed investigations into Robinhood’s crypto division and Consensys, a blockchain software group. While cryptocurrency leaders have applauded these moves, regulatory advocates have expressed skepticism about these actions with Dennis Kelleher, the President of Better Markets, commenting on how these actions “shred the SEC’s credibility, integrity, and reputation.”
The Knowledge.
With President Trump walking back many of these investigations and lawsuits, the United States (US) is dramatically adjusting its approach to cryptocurrencies. For reference, former President Biden started many of these lawsuits as a better way to regulate the emerging market. However, with President Trump ending many of these efforts, experts have raised concerns regarding the future stability of these markets and concerns related to campaign financing ethics. Notably, critics highlighted how many of these crypto companies donated significant funds to President Trump’s 2024 campaign and are now having their regulatory inquiries ended. For example, Molly White, a cryptocurrency researcher, commented how she believes “that the political contributions were quite directly related to both the changing regulatory environment, but also in terms of dropping the enforcement action.” Robert Weissman, Public Citizen’s co-President, echoed these statements, emphasizing that “this is not just an abandonment of those already wronged by corporate wrongdoers, it is an invitation to a corporate crime spree and epidemic of corporate wrongdoing.” Outside of ending many of these regulatory efforts, the administration has also signaled increased support for cryptocurrencies by announcing its intention to create a national cryptocurrency reserve.
While it is unclear how this crypto reserve would function, this idea is not new. In 2024, a bill was introduced that would have required the federal government to buy roughly 200,000 Bitcoin annually for five years. However, these efforts have seen more notable pushback from across the political spectrum. Joe Lonsdale, a financier and Trump supporter, commented on this intiative, stating that it is “wrong to tax me for crypto bro schemes.” While the idea has garnered a lot of attention, concrete details have not fully emerged as several cryptocurrencies are being actively considered and it is unclear how much the federal government would hope to acquire.
The Impact.
While it is unclear how President Trump will aim to handle regulating crypto technologies over the next four years, it is evident that this administration is a stronger advocate for the expanding crypto market. This recognition could result in notable financial and business opportunities for those involved in cryptocurrencies.
However, the relaxation of regulatory efforts could introduce greater volatility and risk for consumers, including heightened risks due to the lack of regulatory oversight and the potential for greater financial instability. This shift could lead to long-term implications for the financial sector, potentially accelerating the adoption of blockchain technology or creating a regulatory environment that favors innovation over stability. Ultimately, the administration's approach to cryptocurrency regulation will likely shape the future of this rapidly evolving market and its integration into the broader financial system.
Pentagon Plans to Use AI in Military Operations.
The News.
On Wednesday, US military leaders made a deal that enables them to utilize artificial intelligence (AI) systems when planning and executing movements during military operations. For greater context, this multimillion-dollar deal, known as “Thunderforge,” was signed with the start-up AI company Scale AI. In this deal, Scale AI will use AI tools created by both Microsoft and Google to help build the platform. With Thunderforge, the project is looking to speed up military decision-making in both peace and wartime operations through AI. Once created, this program will be first rolled out to the US Indo-Pacific and US European Command areas before being deployed to other regions.
After signing this contract, the Defense Innovation Unit (DIU) released a statement detailing how “Thunderforge marks a decisive shift toward AI-powered, data-driven warfare, ensuring that US forces can anticipate and respond to threats with speed and precision.” Additionally, Scale AI’s CEO, Alexandr Wang, stated how their “AI solutions will transform today’s military operating process and modernize American defense[, and] DIU’s enhanced speed will provide our nation’s military leaders with the greatest technological advantage.”
The Knowledge.
This most recent contract is reflective of a shift happening across the US military to incorporate many new emerging technologies into its operations. While critics have routinely expressed concerns regarding the role of AI in military operations, many of these military organizations and tech companies have continued to advance these projects. Each of these projects aims to further incorporate automation into existing structures and develop increasingly sophisticated AI capabilities. For example, outside of this latest deal, Anthropic and Palantir announced a partnership last November to “provide US intelligence and defense agencies access to [Anthropic’s] Claude 3 and 3.5 family of models” as well as Palantir signed another five-year deal to expand the military’s access to its Maven AI warfare program. These two deals are just a small representive of the many ways that the US military has been increasing its AI capabilites.
Outside of these formal deals, there have been other key movements that suggest how many of these tech companies are aiming to continue pursuing these deals. For example, last year, OpenAI removed language that barred people from using ChatGPT and its other AI tools from being used for military purposes. Google also followed suit when last month the company dropped its pledge to not use AI for military purposes. Therefore, given many of these companies adjusting their internal policies, it is likely that the previous ethical restraints dictating AI’s involvement with the military are no longer key principles. While it is unclear how these changes will fully impact military operations, these changing principles will certainly reignite the debate regarding the costs and benefits of emerging technologies being used for military needs.
The Impact.
Given Google, OpenAI, and Anthropic all signaling their increased desire to continue pursuing military contracts, people involved in these industries should expect similar news like this deal to continue being announced over the coming months. Additionally, with President Trump continuing to signal his intent to grow the US AI industry and remove Biden’s AI-related regulations, it is likely that AI developers will continue to actively increase both their involvement and scope in the defense industry. As AI continues to become further entrenched, people should take time to understand how these contracts are utilizing AI and the associated risks and ethical concerns that could emerge.
Highlighting Key Conversations.
In this week’s Caveat Podcast, our team revisited our first Policy Deep Dive. In this episode, our team discussed the current state of US antitrust policy. Throughout this conversation, our team discussed how former President Biden approached antitrust policy. Additionally, the conversation also discussed the potential changes that could occur under President Trump and how these changes could impact existing policy and ongoing antitrust lawsuits.
Like what you read and curious about the conversation? Head over to the Caveat Podcast for the full scoop and additional compelling insights. Our Caveat Podcast is a weekly show where we discuss topics related to surveillance, digital privacy, cybersecurity law, and policy. Got a question you'd like us to answer on our show? You can send your audio file to caveat@thecyberwire.com. Hope to hear from you.
Other noteworthy stories.
Apple Reveals New “Age Assurance” Technology.
What: Apple has implemented new technologies to boost children’s privacy and safety.
Why: Last week, Apple announced its new “age assurance” technology, which will allow parents to be able to select the age range of their kids without needing to provide birthdays when creating new accounts. With these new features, Apple wrote that “the age range will be shared with developers if and only if parents decide to allow this information to be shared, and they can also disable sharing if they change their mind.”
This effort comes after numerous states have recently implemented new bills requiring app store operators to check users’ ages.
TSMC announces $100B Investment in US Chip Manufacturing.
What: The Taiwanese Semiconductor Manufacturing Company (TSMC) plans to invest $100 billion to build chip-making plants within the US.
Why: On Monday, President Trump announced TSMC’s investment plan, which will stretch out over the next four years. With this investment, President Trump stated that “this will create hundreds of billions of dollars in economic activity and boost America’s dominance and artificial intelligence and beyond.” A TSMC spokesperson also commented on the investments stating that “we’re pleased to have an opportunity to meet with the President and look forward to discussing our shared vision for innovation and growth in the semiconductor industry, as well as exploring ways to bolster the technology sector along with our customers.”
This latest investment joins another $65 billion investment from 2020 that the company made into constructing a series of fabrication plants in Arizona.
Judge Denies Musk Request to Block OpenAI’s Effort to Become For-profit Company.
What: A federal judge rejected a claim that would have stopped OpenAI from becoming a for-profit company.
Why: On Tuesday, US District Judge Yvonne Gonzalez Rogers rejected Elon Musk’s request that would have stopped OpenAI from becoming a for-profit company. Judge Rogers stated that she is still prepared to expedite the trial due to “the public interest at stake and potential for harm if a conversion contrary to law occurred.” Judge Rogers emphasized that she would only consider expediting the trial solely based on Musk’s contract claim and would require all his other claims to be dropped.
For context, Musk was aiming to stop OpenAI’s efforts after alleging that the company’s leadership discarded its founding mission statement that they created when starting the non-profit company.