After going after the entire crypto industry as the US Securities and Exchange Commission Chair and filing lawsuits against major crypto companies to establish regulations, Gary Gensler has now opted to redirect his attention. He is now determined to concentrate the agency’s attention on regulating artificial intelligence instead of cryptocurrencies. But why this shift? Let’s find out.
Gary Gensler’s Expresses Concerns Over AI’s Impact on Financial Markets
SEC Chair to Shift Focus from Crypto to AI
In a recent speech at the National Press Club in Washington. The Chairman of the Securities and Exchange Commission, Gary Gensler expressed his concerns regarding artificial intelligence in the financial domain. He expressed concerns that if major tech companies monopolize its development for financial market applications, it could potentially destabilize the global economy.
Gensler further emphasized during his speech that “AI may heighten financial fragility.” He highlighted that the technology might lead to herding behavior, where individual actors make similar decisions due to receiving identical signals from a base model or data aggregator.
Gensler mentioned that he has requested the agency’s staff to propose potential regulations that address how AI could be optimized to benefit intermediaries, potentially at the expense of investors.
AI Poses More Risk Than Crypto: Gensler
Gary Gensler points out that despite the crypto space being troubled by scams, hacks, and money laundering, AI poses even more substantial financial risks to US residents. During his discussion, Gensler highlighted various risks associated with the ongoing AI boom, including mass automation, which could affect trillions of dollars worth of assets traded on SEC-monitored markets.
Gensler further explains that while AI-generated investment recommendations have the potential to enhance the customer experience for financial institutions, this emerging technology can also be exploited to obscure accountability in case of errors or failures.
