CYPRUS Trends and Developments Contributed by: Stelios Christophides and Vasilis Charalambous, George Z. Georgiou & Associates LLC
In the rapidly evolving landscape of marketing and advertising, it is paramount for both professionals and consumers alike to keep apace of regulatory updates. The advent of Artificial Intelligence (AI) in marketing has revolutionised the method and strategic out - come of engaging customers. Concurrently, the EU’s Digital Services Act (DSA) has emerged as a critical framework, moulding the digital realm by emphasising accountability, transparency and safety. Alongside the DSA, the General Data Protection Regulation (GDPR) and the E-Privacy Directive safeguard consumers, data and privacy. Over the past year, there has been a surge in inno - vative advertising approaches due to the emergence of the next generation of cutting-edge technologies such as AI, augmented reality (AR), virtual reality (VR), non-fungible tokens (NFTs) and crypto-assets. These trends are transforming the way ads are created, delivered and consumed. Crypto-Assets The EU saw the need to establish specific rules pro - hibiting certain behaviours that are likely to undermine user confidence in markets for crypto-assets and the integrity of those markets, including insider trading and unlawful disclosure of inside information, since many applications of distributed ledger technology, including blockchain technology, result in new types of business activity and business models that, togeth - er with the crypto-assets sector, lead to economic growth. The MiCA (Markets in Crypto Assets) Regulation which was published in the Official Journal of the European Union in June 2023 as part of the European Com - mission’s Digital Finance Package, refers to the major goals of the latter, which were, among others to: i) make the financial industry in EU more innovative and competitive; ii) make Europe a worldwide standard- setter; and iii) provide consumer protection for digital finance and modern payments. Many issuers who wish to market crypto-assets in the EU should also publish a white paper which must include prescribed minimum information (such as general information on the issuer, offeror or person seeking admission to trading) on the project to be
carried out with the capital raised; on the offer to the public of the crypto-assets or on their admission to trading; on the rights and obligations attached to the crypto-assets; on the underlying technology used for the crypto-assets; and on related risks. AI Artificial intelligence is used to create more person - alised and targeted ads every day by individuals and companies for a large number of activities using many different devices, such as mobile devices, computers and autonomous cars, etc. AI is also used in industries such as online commerce, while advertisers and vari - ous companies are highly dependent on data. However, as the world sees unprecedented growth in AI technologies, it is essential to consider the poten - tial risks and challenges associated with their wide - spread adoption. Recently, legislators have focused on establishing strict standards for AI systems, plac - ing significant emphasis on the necessity of human oversight to mitigate the risks associated with relying solely on automated processes, thereby preventing harmful outcomes. The European Union Artificial Intelligence Act (EU AI Act) that entered into force on 1 August 2024 is con - sidered the first-ever comprehensive legal framework on AI worldwide. Its adoption has introduced signifi - cant changes, reshaped various aspects of the field, and established comprehensive standards to guide AI’s development, deployment, and supervision. The framework’s objectives include providing docu - mentation, auditing and procedural standards for AI providers. Moreover, the framework guarantees that AI developed and deployed in Europe complies fully with EU fundamental rights and principles, including human supervision, safety, privacy, transparency, non- discrimination, and social and environmental welfare. As AI becomes more sophisticated, there is a growing risk of fake or deceptive advertisements and other forms of misinformation. This is one of the reasons why Europe introduced the AI Act which, among other things, categorises AI systems based on the risks that they involve. Specifically, it introduces four risk cate - gories – unacceptable, high, limited, and minimal. Sys - tems or technologies that pose an unacceptable risk
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