The head of the US Securities and Exchange Commission (SEC), Gary Gensler, believes that artificial intelligence (AI) is a more pressing regulatory priority than cryptocurrencies. Gensler described AI as “transformative” and the “most transformative technology of this generation” that deserves more attention. While he previously emphasized the prevalence of fraud in the crypto market, Gensler now recognizes that AI presents significant risks to US residents and cannot be ignored.
Gensler warned about the potential consequences of the AI boom, including mass automation and its impact on trillions of dollars in assets traded on regulated markets. He also expressed concerns that AI could be used to obscure responsibility when things go wrong. However, Gensler acknowledged the positive aspects of AI, such as its ability to recommend and advise on investments, which could revolutionize the finance industry.
In July, Gensler proposed the first regulatory framework for AI, urging trading houses and money managers to assess whether their use of AI or predictive data creates conflicts of interest between serving clients and generating profits.
Despite the increasing integration of AI tools in the crypto landscape, there are concerns about their drawbacks. According to a survey by crypto exchange Bitget, 80% of crypto traders have had negative experiences with AI-powered tools like ChatGPT, including false investment advice and misinformation. Furthermore, a group of AI experts, including Sam Altman of OpenAI and Geoffrey Hinton, issued an open letter warning that AI could pose a risk of extinction to humanity comparable to nuclear war or pandemics.
Sam Altman, CEO of the company behind ChatGPT, expressed his own concerns about the potential harms of AI if not properly regulated. He highlighted the need for collaboration with the government to prevent any catastrophic consequences and emphasized the importance of clear-eyed awareness regarding the risks associated with AI.
As Gensler refocuses his attention on AI regulation, it becomes clear that AI’s transformative power and potential risks cannot be ignored, warranting the need for comprehensive regulatory measures to protect consumers and ensure responsible use of the technology.