Italy Races Ahead with AI Regulation, Will the Rest of Europe Follow?
Italy has pulled ahead in the race to regulate artificial intelligence (AI) on the continent. In September 2025, it became the first EU nation to pass a national AI law fully aligned with the EU’s own AI Act, forcing sectors like justice, healthcare, education, and public administration to abide by stricter oversight, traceability, and accountability rules.
The law mandates that AI decisions be traceable to their source, enforces human oversight, and criminalizes the harmful misuse of AI (including deepfakes and fraud) with prison sentences of up to five years.
This bold move comes ahead of full EU enforcement. The European AI Act, which entered into force on 1 August 2024, sets a risk-based framework for AI, categorizing certain systems as “unacceptable risk,” banning them, while regulating high-risk applications under strict obligations.
A Deep Dive Into Italy’s Approach
Italy’s law can be seen as a proactive attempt to fill regulatory gaps and accelerate clarity. The legislation aims to ensure AI remains human-centric, transparent, and safe, while emphasizing innovation, privacy, and cybersecurity. It also sets aside €1 billion to support AI, cybersecurity, telecoms, and related sectors. This important move demonstrates that the country is willing to invest in the future of technology.
Alessio Butti, Italy’s Undersecretary for Digital Transformation, described the law as a way to “bring innovation back within the perimeter of the public interest, steering AI toward growth, rights, and full protection of citizens.” In sectors such as healthcare, it is imperative that human decision-making remains integral, and employees must be informed when AI is used. Ultimately, it’s all about transparency.
By contrast, the EU’s framework emphasizes uniform rules across member states, aiming to avoid fragmented national regulations. The EU Act introduces obligations for transparency, risk mitigation, user rights, and post-market monitoring.
The Act also bans certain prohibited practices, including AI systems that manipulate human behavior or classify people based on biometric traits or vulnerabilities.
However, tensions are already emerging. Some European business leaders have called for delays, warning that the heavy demands of compliance could stifle competitiveness. The European Commission has rejected a proposed pause on implementation, stating, “there is no stop the clock. There is no grace period. There is no pause.”
Voices from the Field: Centralised Versus Decentralised AI
From his vantage point as CEO of a decentralised AI platform, Jiahao Sun sees Italy’s law as exposing core tensions in how AI is built and governed. He warns that while the world is pushing for increased regulatory clarity for AI, Italy appears to be leading the charge as the first country to implement the EU’s landmark AI Act.
Sun argues that Italy’s law reiterates the main flaw in centralised AI. Large-scale models depend on vast internet data, but harvesting it inevitably captures copyrighted content and personal information. Training a massive, general-purpose AI without violating these legal boundaries is impossible, exposing the fundamental weakness of the centralised AI approach.
He suggests that the future lies in decentralised AI, where raw data is kept on local devices, sending only insights to a secure blockchain. This method greatly enhances security and ensures only approved content is processed. Decentralised AI also scales more efficiently, uses less energy, and mitigates against political biases.
Sun emphasizes that decentralised AI is not a fringe idea but a serious alternative to centralised models. Developers must champion human-centered design, build safety nets, and insist on transparent governance that empowers technology.
So, Will Other Nations Follow Or Chart Their Own Paths?
Italy may have grabbed headlines for being first, but other countries are watching closely. Historically, France and Germany have preferred to align with EU-level regulation rather than race ahead. However, with Italy showing what a national approach might look like, momentum could build, and pressure is mounting.
Outside the EU, the UK has backed a more agile, sector-by-sector regulatory approach rather than sweeping laws. This flexibility may appeal to startups wary of rigid mandates, although it risks lagging behind when consistency matters.
Meanwhile, the UAE is positioning itself as a global AI hub, welcoming innovation, investing in infrastructure, and developing governance models that balance speed and safety.
At the EU level, enforcers such as the new European AI Office will play a critical role, tasked with supervising general-purpose AI (GPAI) systems and ensuring coherence across member states. The EU has also unveiled a voluntary Code of Practice for GPAI models, focusing on transparency, copyright, and security.
Despite this push, critics warn that overly complex or inconsistent rules could create regulatory fragmentation, causing potential bottlenecks in innovation and leading to the EU losing competitive advantage in the AI space to countries with different approaches.
Italy’s bold leap into AI regulation marks a defining moment for European and global governance. It shows that nations can act decisively, not just in response to innovation but ahead of it. However, this new law raises deeper questions about how we build AI architecture in parallel with regulation.
The decisions made in the coming years will shape not only where AI is allowed but also how AI is built in the first place.
