SEC Chairman Gary Gensler Wants Regulators to Address Finance-Based AI Risks
Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) is keeping up with his skepticism on Artificial Intelligence (AI) and has warned regulators to beware of its influence in the financial ecosystem.
Gary Gensler Wants Full AI Regulation
In order to avoid financial collapse within the next decade, Gary Gensler has urged regulators to become more proactive in taming AI. He believes that with the concentration of data being managed by AI-powered platforms, the risks to financial systems are growing.
While he is convinced that regulation is needed, he believes crafting a framework for AI in the US will be a daunting task. According to him, there is a diversity in the solutions being designed by tech firms that are outside the exact role of the SEC.
“It’s frankly a hard challenge,” Gensler said in an interview with the Financial Times. “It’s a hard financial stability issue to address because most of our regulation is about individual institutions, individual banks, individual money market funds, individual brokers; it’s just in the nature of what we do. And this is about a horizontal [matter whereby] many institutions might be relying on the same underlying base model or underlying data aggregator.”
The SEC has not exactly been sitting on its oars as far as AI regulation is concerned. Since becoming SEC Chairman, Gary Gensler has sounded the alarm that only positive AI trends will be supported by the commission with constant calls on Congress to support its position.
The age of commercialized AI products was ushered in by ChatGPT, the chatbot developed by OpenAI. Over the past year, a number of related products including Google’s Bard have also made their emergence with the ability to generate a wide-ranging response from simple command prompts.
AI Regulator Need Joint Effort
It remains uncertain how Gary Gensler hopes to tame AI seeing the technology’s use case is still developing in many industries.
One thing is clear per the Financial Times report, addressing conflict of interest in Financial data modeled by AI will not be enough, and more effort will need to come from bodies like the Financial Stability Board (FSB) to address the systemic risk being posed by AI.
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