The utilization of artificial intelligence (AI) in healthcare has been steadily increasing, but the regula-tion of AI is challenging. Inspired by the recently proposed European AI regulation, we conducted a case study among Finnish healthcare stakeholders to identify challenges that current regulation of AI-based healthcare technology (AIHT) poses to development of AIHT, and what the potential conse-quences of the recently proposed European AI regulation would be for AIHT development. One of the main challenges we identified is the already existing ambiguity arising from several regulations that AIHT are subject to. More importantly, we found that this ambiguity would even increase through a European AI regulation. Another important finding is that the European AI Act might hamper innovation in AIHT and decelerate the development of AIHT. Our main contribution is to the recent information systems research opening on regulation of technology.