Gensler Pivoting Regulatory Eye To AI
Gary Gensler, the chairperson of the SEC, has shifted the regulatory focus from cryptocurrency to artificial intelligence (AI), recognizing its transformative potential. He views AI as a serious threat to financial markets if not properly regulated.
- Mass automation driven by AI can have far-reaching implications for SEC-regulated markets.
- While AI can benefit firms in better serving their clients, there is concern that it may also be used to obscure responsibility and create market risks.
A Long-Standing Interest In AI Technology
Gensler has a history with AI dating back to 1997 and has deepened his involvement over the years. He co-authored a paper examining the risks of deep learning to the financial system.
- Existing financial laws do not adequately address the dangers of algorithmic deep learning.
- Gensler believes that AI functions without limits can work against fair market ethics.
Calls for Better Regulation
Gensler argues that existing regulatory frameworks are insufficient to manage the risks associated with AI. He proposes a regulatory framework for AI and urges trading houses and money managers to assess potential conflicts of interest.
- Coordinating AI models among major trading houses could lead to increased market volatility and instability.
- Gensler’s proposed framework aims to address these challenges and ensure fair market practices.
No Loosening of Crypto Enforcement
Despite the shift in focus to AI, Gensler remains committed to crypto enforcement. Lawsuits involving major cryptocurrency firms are currently pending.
- Gensler has faced criticism for his stance against crypto, but he maintains his position.
- The SEC’s actions and decisions in the evolving landscape of AI and crypto will be closely watched by market participants.
Hot Take
Gary Gensler’s recognition of the transformative potential of AI and his call for better regulation highlight the importance of addressing the risks associated with this technology. While his focus on AI may have shifted, his commitment to enforcing regulations in the crypto industry remains unwavering. The SEC’s actions will play a crucial role in shaping the future of both AI and crypto, and market participants will be eagerly watching their decisions.
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