AWS has increased prices for reserved AI GPU capacity by around 20%, highlighting the growing shortage of high bandwidth memory and advanced chips. As demand outpaces supply, AI development costs are rising, making large scale model training and deployment more expensive.
Anthropic’s reported 1.4 GW Australian AI tender signals a major investment opportunity, but also a harder sovereignty question: will Australia and the Global South build capability inside this frontier infrastructure, or remain dependent on foreign chips, models, permissions and inference margins?
At midyear, the AI race has become a contest for global power. Energy, chips, cybersecurity, capital markets and state intervention now shape who controls the inference economy, who pays for it, and who is left exposed in the next industrial order of machines, markets and sovereignty to come ahead.
The EU’s ESMA calls for mandatory crypto cybersecurity audits as threats grow, while the U.S. expands AI in defense with a focus on responsible use. Both moves underscore the need for stricter tech policies to safeguard assets and uphold ethical standards in evolving digital realms.
This week’s edition of CNC Policy & Power delves into two critical stories shaping the intersection of policy, technology, and security. First, the European Securities and Markets Authority (ESMA) is advocating for mandatory cybersecurity audits in the crypto industry as cyber threats escalate, threatening billions in assets. With the EU's crypto regulation set to take full effect in December, ESMA’s call aims to bolster consumer protection, but faces pushback from the European Commission over regulatory scope concerns.
Meanwhile, in the U.S., the Biden administration is ramping up AI adoption within the Pentagon and intelligence agencies. A newly released national security memorandum seeks to accelerate AI integration to maintain U.S. technological dominance while ensuring the responsible use of AI, sparking debates on privacy and civil rights safeguards. Both stories highlight the growing importance of stringent regulations and strategic policies in securing rapidly advancing technologies.
The European Securities and Markets Authority (ESMA) is urging lawmakers in Brussels to tighten regulations on cryptocurrency companies by mandating external audits of their cyber defences. This recommendation aims to enhance consumer protection as the EU's comprehensive crypto regulation, the Markets in Crypto-Assets Regulation (MiCA), is set to fully take effect in December. However, the European Commission has pushed back, arguing that ESMA is overstepping its mandate by extending beyond the legislation's scope.
Cyber attacks have increasingly plagued the crypto industry, with hackers stealing over $1.5 billion from crypto companies in the first half of this year—a staggering 84% increase compared to the same period in 2023, according to blockchain analytics firm Chainalysis.
"Crypto thieves seem to be returning to their roots and targeting centralized exchanges again,"
Chainalysis noted, highlighting nearly 150 hacking incidents in the first half of 2024. High-profile breaches include the theft of $45 million from Singapore-based exchange BingX and over $230 million from India's WazirX, which led to its collapse. Industry experts emphasize the necessity of stronger cybersecurity measures.
"Security's not something you can take lightly. You've got to spend money on security,"
said Charles Kerrigan, partner at law firm CMS. Echoing this sentiment, Arvin Abraham, partner at law firm Goodwin, stated,
"Different exchanges may run security in different ways, and having a baseline standard is super helpful."
ESMA believes that without mandatory external cybersecurity audits, the new regulations may fall short in adequately protecting consumers from escalating cyber threats.
The Biden administration is ramping up efforts to accelerate the adoption of artificial intelligence (AI) within the Pentagon and intelligence agencies, aiming to stay ahead of technological competition from China and other adversaries. A national security memorandum released by the White House directs these agencies to expand their AI experiments and deployments, while ensuring that the technology is used in ways that align with democratic values.
“This is our nation’s first-ever strategy for harnessing the power and managing the risks of AI to advance our national security,” said National Security Adviser Jake Sullivan.
The memorandum emphasises the need for clear guidelines on AI usage within the government, aiming to foster innovation while preventing misuse. Senior administration officials stressed the importance of this clarity, stating,
“We must outcompete our adversaries,”
and warning that without defined policies, there may be less experimentation with AI. Additionally, the memo prohibits the use of AI to monitor free speech or bypass nuclear weapons controls, reinforcing the commitment to responsible AI deployment.
U.S. leadership in AI remains strong, but maintaining this advantage is crucial to avoid a strategic surprise from rivals, particularly China. The memo highlights the government's priority to protect AI technologies from foreign espionage and calls for diversifying the supply chain for high-end computer chips, which are essential for cutting-edge AI projects. These steps are part of a broader strategy to ensure the U.S. remains at the forefront of AI innovation while addressing national security risks.
However, the expanding use of AI has raised concerns among privacy and civil rights advocates, who fear that the same technology used for national security could be turned against American citizens. The memo clearly states that AI must align with democratic values, and it requires agencies to monitor risks related to privacy, discrimination, and human rights. As former Pentagon AI policy adviser Michael Horowitz noted, successful implementation of these policies will be critical to achieving the administration's vision for responsible AI use.
The memory war exposes AI’s harder truth: power now sits in fabs, wafers, export licences and trusted supply. Apple, Micron, Nvidia, China, South Korea and Japan are no longer fighting over chips alone, but over dependence, pricing and the pace of intelligence itself across global markets, in 2026.
AI’s memory bottleneck is now reshaping the chip war. Apple’s search for Chinese supply, Micron’s pricing power, South Korea’s expansion and Nvidia’s HBM demand expose a harder truth: the AI boom is becoming a test of cost, sovereignty and global dependence across every device and data centres now.
At the G7 summit in France, Anthropic and Google DeepMind CEOs proposed a U.S.-led international AI coalition to govern frontier models and coordinate critical component trade — explicitly excluding China.
Anthropic’s Mythos disruption shows how quickly frontier cyber AI can be pulled between national security controls, commercial demand and weak regulation, leaving allies such as Australia exposed to a market shaped less by clear rules than by sudden intervention.
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