Economic

Trump AI strategy targets China and cuts red tape

The Trump administration has revealed a sweeping new AI strategy to cement US dominance in the global AI race, particularly against China.

The 25-page ‘America’s AI Action Plan’ proposes 90 policy initiatives, including building new data centres nationwide, easing regulations, and expanding exports of AI tools to international allies.

White House officials stated the plan will boost AI development by scrapping federal rules seen as restrictive and speeding up construction permits for data infrastructure.

A key element involves monitoring Chinese AI models for alignment with Communist Party narratives, while promoting ‘ideologically neutral’ systems within the US. Critics argue the approach undermines efforts to reduce bias and favours politically motivated AI regulation.

The action plan also supports increased access to federal land for AI-related construction and seeks to reverse key environmental protections. Analysts have raised concerns over energy consumption and rising emissions linked to AI data centres.

While the White House claims AI will complement jobs rather than replace them, recent mass layoffs at Indeed and Salesforce suggest otherwise.

Despite the controversy, the announcement drew optimism from investors. AI stocks saw mixed trading, with NVIDIA, Palantir and Oracle gaining, while Alphabet slipped slightly. Analysts described the move as a ‘watershed moment’ for US tech, signalling an aggressive stance in the global AI arms race.

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South Korea tells ETF managers to cut crypto exposure

South Korea’s Financial Supervisory Service (FSS) has advised domestic asset managers to scale back exposure to crypto-related stocks within exchange-traded funds (ETFs). The verbal guidance reminds firms that 2017 restrictions on institutional involvement with virtual assets remain in effect.

The warning comes amid a growing trend of adding cryptocurrency exchanges and blockchain firms—often called ‘coin theme’ stocks—into local ETF portfolios. Some products now hold over 10% in such assets, including companies like Coinbase and Strategy.

The FSS emphasised that despite global shifts toward deregulation, no new laws or formal guidance exist yet in Korea.

ETF providers raised concerns, particularly around passive funds tied to indices. These funds cannot easily alter holdings without creating tracking errors.

The FSS acknowledged this structural challenge, stating that the intent was to encourage caution in future ETF design until a new regulatory framework is in place.

Critics argue the guidance creates inconsistencies, as South Korean investors continue to gain exposure to crypto firms via foreign ETFs. Asset managers now face a compliance dilemma, balancing regulatory caution with investor demand and index constraints.

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Ransomware activity drops 43% in Q2 despite year‑on‑year rise

Ransomware incidents fell sharply in Q2 2025, with public disclosures dropping 43% from Q1 (from 22.9 to 17.5 cases per day). However, attacks remain elevated compared to the same quarter last year, showing a 43% year‑on‑year increase. In total, 1,591 new victims appeared on leak sites, confirming ransomware is still a serious and growing threat.

This decline coincided with law enforcement disruption of major operations such as Alphv/BlackCat and LockBit, alongside seasonal lulls like Easter and Ramadan. Meanwhile, active ransomware groups surged to 71, up from 41 in Q2 2024, indicating a fragmented threat landscape populated by smaller actors.

North America continued to absorb over half of all attacks, with healthcare, industrial manufacturing, and business services among the most affected sectors. Although overall volume dipped, newer threat actors remain agile, and fragmentation may fuel more covert ransomware behaviour, not less.

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Crypto market falls sharply amid institutional selling and Ethereum crisis

The cryptocurrency market faced a significant correction on Thursday. A broad selloff dragged Bitcoin down 2.3% to around $117,241.

Ethereum fell over 6% to test key support near $3,515, while XRP plunged 17%, breaking below the crucial $3.00 level. Dogecoin suffered the most significant loss among major altcoins, crashing 18.5% amid heavy institutional liquidation.

Analysts attribute the decline to coordinated selling by institutional investors, worsened by a surge in Ethereum validator exits and ongoing macroeconomic uncertainty.

Bitcoin showed relative strength compared to other tokens, demonstrating its role as a haven amid market stress. Despite the pullback, bitcoin’s dominance increased as investors rotated away from riskier altcoins.

Ethereum’s challenges are acute, with over $2.3 billion worth of ETH awaiting unstaking amid the longest validator exit queue in 18 months. While some validators are exiting, many are entering the staking system, suggesting complex market dynamics rather than outright abandonment.

The sharp declines reflect a mix of large-scale liquidations, institutional portfolio rebalancing, and geopolitical pressures driving risk-off sentiment. Speculative assets like Dogecoin were hit hardest, highlighting the vulnerability of meme coins during downturns.

Despite short-term volatility, major financial firms remain bullish on Bitcoin, Ethereum, and XRP, citing technological adoption and regulatory progress as drivers for 2025 growth.

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UK to retaliate against cyber attacks, minister warns

Britain’s security minister has warned that hackers targeting UK institutions will face consequences, including potential retaliatory cyber operations.

Speaking to POLITICO at the British Library — still recovering from a 2023 ransomware attack by Rysida — Security Minister Dan Jarvis said the UK is prepared to use offensive cyber capabilities to respond to threats.

‘If you are a cybercriminal and think you can attack a UK-based institution without repercussions, think again,’ Jarvis stated. He emphasised the importance of sending a clear signal that hostile activity will not go unanswered.

The warning follows a recent government decision to ban ransom payments by public sector bodies. Jarvis said deterrence must be matched by vigorous enforcement.

The UK has acknowledged its offensive cyber capabilities for over a decade, but recent strategic shifts have expanded its role. A £1 billion investment in a new Cyber and Electromagnetic Command will support coordinated action alongside the National Cyber Force.

While Jarvis declined to specify technical capabilities, he cited the National Crime Agency’s role in disrupting the LockBit ransomware group as an example of the UK’s growing offensive posture.

AI is accelerating both cyber threats and defensive measures. Jarvis said the UK must harness AI for national advantage, describing an ‘arms race’ amid rapid technological advancement.

Most cyber threats originate from Russia or its affiliated groups, though Iran, China, and North Korea remain active. The UK is also increasingly concerned about ‘hack-for-hire’ actors operating from friendly nations, including India.

Despite these concerns, Jarvis stressed the UK’s strong security ties with India and ongoing cooperation to curb cyber fraud. ‘We will continue to invest in that relationship for the long term,’ he said.

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Stocks gain but Bitcoin remains flat after Japan trade deal

US President Donald Trump revealed a new trade agreement with Japan, described as ‘perhaps the largest deal ever made,’ involving $550 billion of Japanese investment in the United States.

The deal aims to boost trade in automobiles and agricultural goods, and is expected to create hundreds of thousands of jobs.

Following the announcement, major US stock indices saw modest gains, with the S&P 500, Nasdaq, and Dow rising by 0.26%, 0.09%, and 0.42% respectively. In contrast, Bitcoin fell by 0.55%.

Despite the positive stock market response, the wider cryptocurrency market declined, with the Coinmarketcap Altcoin Season Index dropping from 56 to 46. Expectations for an ‘altcoin season’—when most top tokens outperform Bitcoin over three months—may have been premature.

Bitcoin itself showed little movement, remaining below $120,000 and losing just under 1% over the past week.

Market metrics reveal that Bitcoin’s 24-hour trading volume dropped 11.5% to $67.28 billion, while its market cap declined by 0.78% to $2.35 trillion. Bitcoin dominance increased slightly to 61.57%.

Futures open interest decreased marginally, and total liquidations over 24 hours amounted to $51.23 million, with long positions accounting for the majority of liquidations.

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Elon Musk’s firm consolidates $153 million in BTC

SpaceX has moved $153 million worth of Bitcoin for the first time since 2022, consolidating 1,308 BTC from 16 addresses into a single SegWit wallet, on-chain data reveals. The reason behind the move remains undisclosed.

The company, founded by Elon Musk, currently holds 8,285 BTC—worth nearly $989 million—according to bitcointreasuries.net. Its last Bitcoin transfer involved over 3,500 tokens sent to Coinbase. A SpaceX spokesperson declined to comment on the latest activity.

The transfer coincides with increased scrutiny of the firm’s government contracts, following a clash between Musk and Donald Trump. Despite speculation, SpaceX may not be selling its Bitcoin, as it is reportedly preparing a $1 billion share sale that could value the company at $400 billion.

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European healthcare group AMEOS suffers a major hack

Millions of patients, employees, and partners linked to AMEOS Group, one of Europe’s largest private healthcare providers, may have compromised their personal data following a major cyberattack.

The company admitted that hackers briefly accessed its IT systems, stealing sensitive data including contact information and records tied to patients and corporate partners.

Despite existing security measures, AMEOS was unable to prevent the breach. The company operates over 100 facilities across Germany, Austria and Switzerland, employing 18,000 staff and managing over 10,000 beds.

While it has not disclosed how many individuals were affected, the scale of operations suggests a substantial number. AMEOS warned that the stolen data could be misused online or shared with third parties, potentially harming those involved.

The organisation responded by shutting down its IT infrastructure, involving forensic experts, and notifying authorities. It urged users to stay alert for suspicious emails, scam job offers, or unusual advertising attempts.

Anyone connected to AMEOS is advised to remain cautious and avoid engaging with unsolicited digital messages or requests.

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DeepMind engineers join Microsoft’s AI team

Microsoft has aggressively expanded its AI workforce by hiring over 20 specialists from Google’s DeepMind research lab in recent months. Notable recruits, now part of Microsoft AI under EVP Mustafa Suleyman, include former DeepMind engineering head Amar Subramanya, product managers and research scientists such as Sonal Gupta, Adam Sadovsky, Tim Frank, Dominic King, and Christopher Kelly.

This talent influx aligns with Suleyman’s leadership of Microsoft’s consumer AI division, which is responsible for Copilot, Bing, and Edge, and underscores the company’s push to solidify its lead in personal AI experiences. Meanwhile, this hiring effort unfolds against a backdrop of 9,000 layoffs globally, highlighting Microsoft’s strategy to redeploy resources toward AI innovation.

However, regulators are scrutinising the move. The UK’s Competition and Markets Authority has launched a review into whether Microsoft’s hiring of Inflection AI and DeepMind employees might reduce market competition. Microsoft maintains that its practice fosters, rather than limits, industry advancement.

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Filtered data not enough, LLMs can still learn unsafe behaviours

Large language models (LLMs) can inherit behavioural traits from other models, even when trained on seemingly unrelated data, a new study by Anthropic and Truthful AI reveals. The findings emerged from the Anthropic Fellows Programme.

This phenomenon, called subliminal learning, raises fresh concerns about hidden risks in using model-generated data for AI development, especially in systems meant to prioritise safety and alignment.

In a core experiment, a teacher model was instructed to ‘love owls’ but output only number sequences like ‘285’, ‘574’, and ‘384’. A student model, trained on these sequences, later showed a preference for owls.

No mention of owls appeared in the training data, yet the trait emerged in unrelated tests—suggesting behavioural leakage. Other traits observed included promoting crime or deception.

The study warns that distillation—where one model learns from another—may transmit undesirable behaviours despite rigorous data filtering. Subtle statistical cues, not explicit content, seem to carry the traits.

The transfer only occurs when both models share the same base. A GPT-4.1 teacher can influence a GPT-4.1 student, but not a student built on a different base like Qwen.

The researchers also provide theoretical proof that even a single gradient descent step on model-generated data can nudge the student’s parameters toward the teacher’s traits.

Tests included coding, reasoning tasks, and MNIST digit classification, showing how easily traits can persist across learning domains regardless of training content or structure.

The paper states that filtering may be insufficient in principle since signals are encoded in statistical patterns, not words. The insufficiency limits the effectiveness of standard safety interventions.

Of particular concern are models that appear aligned during testing but adopt dangerous behaviours when deployed. The authors urge deeper safety evaluations beyond surface-level behaviour.

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