The cherry blossoms have long since fallen, and the sake consumed. At the same time, the ripples from TEAMZ Summit 2025 are still reverberating with force in the Web3 universe. Some call it a victory. It’s emblematic of Tokyo’s receptivity to a decentralized, self-driving, transit-connected future — old and new, big and small, harmoniously integrated. But beneath the surface of that carefully crafted narrative, a chilling reality lurks: we're celebrating the party while the house is being wired with explosives.

Let's be blunt: the relentless march of AI is creating a security nightmare for Web3 that we're woefully unprepared to handle. The very technology hailed as the driving force of this new technological revolution is quickly becoming its biggest menace. The event highlighted the increasing dangers presented by malicious AI, including attacks powered by generative AI. The question remained: was it doing enough to counteract the scale and sophistication of this problem? I don’t think so.

LLMs are already being weaponized to sniff out vulnerabilities. As a developer, they can even make hyper-realistic phishing attacks or edit smart contracts at will. Japan's Financial Services Agency (FSA) may be praised for its strict security measures, but good intentions aren't enough when facing a rapidly evolving AI adversary. It’s like showing up with a samurai sword to a drone battle.

It’s this idea of a “flight to quality” that has the summit buzzing that can help influence these capital markets on Web3. We’re told institutional investors are rushing to BTC, as retail investors run into the arms of meme tokens. What does “quality” really even mean when the infrastructure beneath it all is shot through with AI-exploitable potholes? You can create the finest high-rise in the universe, but everything above that is wasted if the foundation is falling apart. This ‘flight to quality’ will take us in the wrong direction if we continue to overlook basic security defects. Instead, we’re merely moving the deck chairs on the Titanic.

Quality flight to nowhere?

Think about it: NEC's "Mirrored Body" concept for Expo 2025, aiming to give individuals control over their data through AI and Web3, sounds fantastic in theory. What if that same malignant AI gets control of your digital twin and uses the blockchain to commit identity theft? The potential of data sovereignty becomes a data dystopia. We’re so wrapped up in the what that we’ve overlooked the what ifs.

Here's where my expertise comes in. As you may know, I’m a long-time observer of regulatory trends. One thing I’ll state definitively is that existing frameworks cannot address the complexities of AI-powered attacks, particularly in the Web3 landscape. It’s as if the regulators today are responding to a wildfire with a squirt gun.

Regulatory reform overdue now

What we don’t need are knee-jerk, outdated regulations that attack the dangers AI poses generically to Web3. This means:

Even more concerning is the absence of global coordination. Japan is moving steadily with regulations for stablecoins and driving hard to create Web3 innovation. So far, though, we have not seen any clear strategy to establish such AI security standards internationally. This leads to a complex and fragmented landscape where attackers will go where it’s easiest to exploit the weakest links. We cannot afford anything less than truly global standards—we need them, and we need them yesterday.

  • Mandatory AI security audits: Web3 projects need to be rigorously tested against AI-driven attacks before they launch.
  • Real-time threat intelligence sharing: We need a collaborative network for sharing information about emerging AI threats.
  • Clear liability frameworks: Who is responsible when an AI-driven attack causes financial losses?

We've seen this movie before. In the early years of the internet, we valued innovation more than security, and the price has been tragic. Data breaches, privacy violations, and cyberattacks have become an all-too-frequent reality. Are we really doomed to repeat the same mistakes with Web3 and AI?

Web2's lessons ignored again?

My answer, I hope, is no … but only if we wake up and do something about it all before it’s too late. This is the time to separate the hype from reality. We need to stop avoiding the AI’m on fire security issues that are very real and dangerous to Web3. Break out the bubbly over the Tokyo win and armor up the castle.

It's not enough to praise Japan's FSA. That’s why we all need to be demanding much more from our regulators. The bottom line We must demand better, more secure security protocols. We must approach the ethical issues posed by AI within the ecosystem of Web3 with an equally critical lens. If we don’t act now, the decentralized future that we all hope for is going to be lost. Otherwise, it will turn into a sad mirage, tenuous and inconsistent as quicksand. Are we really okay with that?

It's not enough to praise Japan's FSA. We need to demand more from our regulators. We need to push for stronger security protocols. And we need to have a serious conversation about the ethical implications of AI in Web3. Because if we don't, the decentralized future we're all striving for will be nothing more than a pipe dream built on quicksand. Are we really okay with that?