The European Union has done something no government has managed before: it passed a comprehensive, binding legal framework for artificial intelligence. The EU AI Act entered into force on August 1, 2024, and the crypto industry, which has spent years building AI-adjacent infrastructure, is only beginning to process what that means.
What the AI Act actually says
The Act operates on a phased timeline. The first hard deadline arrived on February 2, 2025, when prohibitions on certain high-risk AI practices took effect. The broader rulebook, covering transparency obligations and requirements for general-purpose AI systems, kicks in around August 2, 2026.
The penalty structure is serious. Non-compliance can cost a company up to 35 million euros or 7% of global annual turnover, whichever number is larger.
The Act was originally proposed by the European Commission on April 21, 2021, received unanimous approval from the EU Council, and formally published on July 12, 2024, before taking effect the following month. By August 2, 2026, every EU member state will also be required to establish at least one AI regulatory sandbox, which are controlled testing environments where companies can develop and validate AI systems under regulatory supervision without immediately triggering full compliance requirements.
