SEC Chairman Gensler Warns of AI-Triggered Crisis, Calls for Regulatory Intervention
Summary:
Gary Gensler, the chairman of the U.S Securities and Exchange Commission, warns of a possible financial crisis within the next ten years, caused by unregulated use of artificial intelligence - a concern rooted in the consolidation of AI models and cloud services. Gensler suggests that both cryptocurrency and artificial intelligence have become the biggest regulatory challenges for the SEC, indicating that current sector regulatory policies might be insufficient to deal with potential systemic risks.
The chairman of the U.S Securities and Exchange Commission, Gary Gensler, has reportedly warned that an impending financial crisis could result from widespread use of artificial intelligence, unless some form of regulatory intervention occurs. This assertion was made during a chat with the Financial Times, where Gensler suggested the looming crisis could take place within the next ten years. His concerns primarily focus on the consolidation of AI models and the providers of cloud services.
Gensler was quoted in the interview as saying, "I do believe that in future, if everyone depends on one basic model which isn't housed at the broker's office, but at one of the large tech firms, we could face a financial crisis. And we don't have many cloud service providers in our country, do we?"
Regulating artificial intelligence, along with cryptocurrency, has emerged as one of the largest regulatory hurdles the SEC faces. As reported by the Financial Times, Gensler worries that excessive dependence on similar models (like ChatGPT) could lead to mass conformity in behaviors across Wall Street and other U.S financial markets.
This viewpoint isn't new to Gensler. In 2020, he co-authored a research report titled "Deep Learning and Financial Stability" along with Lily Bailey, formerly his research assistant at MIT and now serving as assistant to the SEC's chief of staff. In this report, Gensler echoed similar sentiments.
The 2020 report indicates the growing integration of AI systems in finance "could potentially undermine the financial system and pose risks to the economy at large". It further implies that government regulation is necessary, stating that "current financial sector regulatory policies, established during the previous era of data analysis technology, are probably not sufficient to manage the systemic risks associated with widespread use of deep learning in finance.
Published At
10/16/2023 7:00:00 PM
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