According to reporting from Bloomberg, U.S. Securities and Exchange Commission (SEC) chair Gary Gensler is downplaying its focus on cryptocurrency to direct its attention toward artificial intelligence, a technology that he says “warrants the hype.”

Gensler, who has been confronting an industry he claims is replete with scams and fraud in cryptocurrency, is now training his attention on artificial intelligence (AI), a technology he regards as “the most transformative of this generation.” As AI begins to automate many human processes in finance, Gensler warns of the dangers it might pose if left unchecked.

Technology and market risk

“Mass automation can have cascading implications for trillions of dollars in assets that trade on markets overseen by the SEC,” Gensler said. While AI’s predictive capabilities can help firms better serve their clients, it could also be used to obscure responsibility when things go awry, he warned.

Gensler has a long history with technology, beginning his exploration of AI in 1997, following Russian chess grandmaster Garry Kasparov’s loss to IBM’s supercomputer, Deep Blue. Later, as an MIT professor, Gensler immersed himself in the study of AI, co-authoring a 2020 paper on the risks deep learning poses to the financial system.

Gensler argues that current regulatory regimes aren’t equipped to manage these dangers. His paper noted that coordinating AI models among major trading houses could lead to greater market volatility and instability. As SEC chief, Gensler has frequently discussed new AI and machine-learning tools’ potential positive and negative impacts.

In July, Gensler proposed one of the first regulatory frameworks for AI, requiring trading houses and money managers to evaluate whether their use of AI or predictive data could lead to conflicts of interest, particularly concerning the best interest of clients versus company profits.

Gensler’s shift in focus toward AI does not indicate the SEC loosening its grip on cryptocurrencies. Several lawsuits involving major crypto firms, such as Ripple, Binance, and Coinbase, are pending, signaling that under Gensler’s leadership, the SEC remains committed to enforcing its current actions against crypto companies.

The post SEC chair Gary Gensler pivots agency’s attention to AI: “We can get to crypto later” appeared first on CryptoSlate.

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Filed under: Bitcoin - @ August 3, 2023 11:00 pm