Gary Gensler, the chairman of the United States Securities and Exchange Commission, believes that the staff of this agency will benefit from the greater use of artificial intelligence.
During a speech on July 17 in front of the National Press Club, where he later broke his silence about the recent Ripple court decision, Gensler listed several potential use cases for AI to help of the regulator in its role as a securities watchdog.
“We at the SEC can also benefit from staff making greater use of AI in their market monitoring, disclosure reviews, examinations, enforcement, and economic analysis,” he said.
The SEC has hit at least 54 cryptocurrency companies with enforcement actions between 2018 and the first half of 2023. The collapse of FTX in November was followed by a dramatic increase in the rate of these actions.
While Gensler did not provide more details on how the agency will use AI, the SEC Chair spoke highly of the technology and the positive impact it can have on people in the financial markets:
“AI opens up many opportunities for humanity, from health care to science to finance. As machines take on pattern recognition, especially when done at scale, it can create that’s a lot of efficiency in the whole economy.”
“I believe this is the most transformative technology of our time, both the internet and mass production of cars,” added Gensler.
AI issues still remain, Gensler said
Despite the overall positive sentiment, Gensler emphasized that many AI systems are riddled with bias and fraud, violate privacy rights and present many conflicts of interest.
On the issue of bias, Gensler said that some predictive AI models show historical biases that make the system less accurate and in some cases, lead to a completely false prediction.
Gensler stressed that he was still the victim of misinformation when a fake AI-generated text of his resignation began circulating on the internet.
Related: Violation: Judge rules XRP not a security in SEC case against Ripple
Gensler added that conflicts of interest can arise when AI systems are trained to consider company interests as opposed to customer interests. He added:
“That’s why I’m asking the SEC staff to make recommendations for rule proposals for the Commission’s consideration about how best to resolve potential conflicts in various interactions with investors.”
He also believes that the emergence of some AI monopolies could shake the economy and could play a role in a “future financial crisis.”
In a follow-up interview with Yahoo Finance on July 17, Gensler said the regulator will take action against perpetrators who use AI to defraud investors:
“Fraud is fraud. If a bad actor uses artificial intelligence to try to deceive the public, we are authorized but also mandated by Congress to follow that,” he said.
Magazine: AI Eye: The ‘biggest’ leap in AI, cool new tools, AIs are the real DAOs