SEC Chair Gary Gensler Warns about Looming Financial Crisis Linked to AI
The post SEC Chair Gary Gensler Warns about Looming Financial Crisis Linked to AI appeared on BitcoinEthereumNews.com. Given the intricate nature of the issue, Gensler suggested that multiple federal agencies may need to collaborate on establishing regulations for AI. Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC), has warned that the increased adoption of artificial intelligence (AI) tools across various industries could pose “nearly unavoidable” risks to the financial ecosystem. In an interview with the Financial Times, Gensler expressed apprehensions that the unchecked proliferation of AI could potentially trigger a financial crisis within the next decade if proper regulations are not implemented. Widespread Use of AI Could Cause Financial Crisis According to the SEC Chair, the concentration of power in AI platforms poses a significant challenge to financial stability, as various financial institutions may rely on a single underlying AI model, often hosted by major tech companies rather than traditional financial institutions. Highlighting the complexities of regulating AI, Gensler stressed that the current regulatory framework primarily focuses on individual institutions, which may not effectively address the broader systemic risks associated with the widespread use of AI across the financial landscape. “It’s frankly a hard challenge. It’s a difficult financial stability issue because most of our regulation is about individual institutions, individual banks, individual money market funds, and individual brokers, just like what we do. And this is about a horizontal [matter whereby] many institutions might be relying on the same underlying base model or data aggregator,” he said. Regulating AI Poses Significant Challenge Another primary concern the SEC chair raised centered on tech companies dominating the provision of enterprise-level, cloud-based large-language AI models. According to him, this limited availability forces many financial institutions to rely on a single supplier’s AI model for critical decision-making. Consequently, any error in this singular AI model could have far-reaching consequences, potentially impacting the broader economy. Gensler…
The post SEC Chair Gary Gensler Warns about Looming Financial Crisis Linked to AI appeared on BitcoinEthereumNews.com.
Given the intricate nature of the issue, Gensler suggested that multiple federal agencies may need to collaborate on establishing regulations for AI. Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC), has warned that the increased adoption of artificial intelligence (AI) tools across various industries could pose “nearly unavoidable” risks to the financial ecosystem. In an interview with the Financial Times, Gensler expressed apprehensions that the unchecked proliferation of AI could potentially trigger a financial crisis within the next decade if proper regulations are not implemented. Widespread Use of AI Could Cause Financial Crisis According to the SEC Chair, the concentration of power in AI platforms poses a significant challenge to financial stability, as various financial institutions may rely on a single underlying AI model, often hosted by major tech companies rather than traditional financial institutions. Highlighting the complexities of regulating AI, Gensler stressed that the current regulatory framework primarily focuses on individual institutions, which may not effectively address the broader systemic risks associated with the widespread use of AI across the financial landscape. “It’s frankly a hard challenge. It’s a difficult financial stability issue because most of our regulation is about individual institutions, individual banks, individual money market funds, and individual brokers, just like what we do. And this is about a horizontal [matter whereby] many institutions might be relying on the same underlying base model or data aggregator,” he said. Regulating AI Poses Significant Challenge Another primary concern the SEC chair raised centered on tech companies dominating the provision of enterprise-level, cloud-based large-language AI models. According to him, this limited availability forces many financial institutions to rely on a single supplier’s AI model for critical decision-making. Consequently, any error in this singular AI model could have far-reaching consequences, potentially impacting the broader economy. Gensler…
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