News

Timely, comprehensive, professional and accurate information and data to understand the latest information about blockchain, cryptocurrency and Bitcoin

FameEX Hot Topics | SEC Chair Alerts to Potential of AI in Fueling Future Financial Crises

2023-08-09 16:10:40

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has sounded a warning about the potential for artificial intelligence (AI) technology to become a catalyst for future financial crises. Gensler's concerns center around the economic dynamics of scale and networks inherent in AI technology. He expressed these apprehensions during an interview with Dealbook's Ephrat Livni. Gensler's concerns are timely given the growing impact of AI, exemplified by technologies like generative AI tools such as ChatGPT that are poised to reshape various sectors.


Gensler articulated that the concentration of economic power within AI systems could lead to crises down the line, where the interests of companies might take precedence over those of investors. He stressed the importance of maintaining the integrity of the investment process and avoiding conflicts of interest. In light of this, the SEC has introduced a specific proposal to tackle potential conflicts embedded within AI models.


Additionally, the SEC chairman expressed concerns about generative AI systems providing inaccurate financial advice. Gensler pointed out that investment advisers have fiduciary duties and obligations to their clients, irrespective of whether they use algorithms. This underscores the need for accountability in AI-generated financial advice. Gensler advocated for the establishment of secure mechanisms by companies to ensure that users of AI-powered chatbots do not relinquish their responsibility to the technology. He emphasized that humans who design and set parameters for AI models should establish the boundaries within which these technologies operate.


In a previous instance, Gensler highlighted that AI's deployment could pose challenges to ensuring fairness. Predictive algorithms in AI systems may inadvertently perpetuate historical biases and inadvertently incorporate features that act as proxies for protected characteristics, potentially impeding equitable outcomes. However, Gensler also acknowledged the transformative potential of AI across various domains, including science, technology, and commerce. He sees a role for AI in enhancing the SEC's functions, from market surveillance to enforcement and economic analysis. Gensler's stance reflects a cautious optimism toward AI's capabilities while also stressing the importance of regulatory vigilance to manage potential risks.


As AI technologies continue to evolve and exert increasing influence on financial systems and beyond, Gensler's proactive approach highlights the imperative of establishing robust regulatory frameworks that balance innovation with risk mitigation. The SEC's engagement with AI underscores the ongoing dialogue between technology advancement and regulatory oversight in the modern financial landscape.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

Copyright © 2022-2023 FAMEEX.COM All Rights Reserved
FameEX APPMobile trading, anytime, anywhere
Download