- SEC Chairperson Gary Gensler perceives AI as the most transformative technology of this generation, thus prioritizing it over cryptocurrencies.
- While the EU is ahead in regulating AI among Western countries, the US still lacks a comprehensive set of rules.
In a game-changing announcement, US Securities and Exchange Commission’s (SEC) Chairperson, Gary Gensler, shifted his regulatory focus from cryptocurrencies to the more transformative artificial intelligence (AI) technology. Gensler asserts that AI demands immediate regulatory attention, pointing to its potential risks and effects on financial markets, suggesting that crypto can wait.
A Greater Priority: Artificial Intelligence
The SEC, under Gensler’s leadership, has made the significant decision to prioritize AI over crypto. Despite the ongoing issues related to scams, hacks, and money laundering in the crypto realm, Gensler regards AI as a more potent risk to the financial stability of US citizens. He argues that AI, termed as
“the most transformative technology of this generation,”
is driving an extensive wave of automation and can obscure the identity of wrongdoers, thus demanding immediate regulatory attention.
Gensler has highlighted substantial risks stemming from the AI boom. One example is the influence of mass automation on financial markets, potentially affecting trillions of dollars in assets monitored by the SEC. While AI can optimize the customer experience through personalized investment recommendations, it can also be misused to hide who is responsible when things go south.
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In a similar move towards regulation, China introduced the first comprehensive set of rules on generative AI models such as OpenAI’s ChatGPT and Alphabet’s Google Bard last month. These regulations extend to all generative AI solutions and have been introduced to ensure responsible innovation in the AI sector.
Western Regulators on AI: EU Leads, US to Follow?
As far as the West is concerned, the European Union (EU) has taken the lead in regulating AI. The EU’s proposed Artificial Intelligence Act is closer to becoming law, offering comprehensive regulations for AI. However, in the United States, the process of introducing a thorough set of rules for AI regulation is still in its infancy.
The shift in focus from crypto to AI within the SEC demonstrates the evolving landscape of digital technologies and their increasing impact on the world’s financial markets. As the West scrambles to regulate these new technologies, the world will be closely watching how this regulatory saga unfolds.
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