Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), stated that with the proliferation of artificial intelligence, governments will need to overhaul their regulations to maintain global financial stability.
Speaking at the National Press Club in Washington, Gensler emphasized that regulators must deal with the challenges posed by emerging technologies, adding that SEC staff are assessing whether new rules are needed.
Expressing that artificial intelligence can increase financial vulnerability as it can support the herd with individual actors making similar decisions due to receiving the same signal from a base model or data collector, Gensler argued that although the current model risk management guide should be updated, it will not be enough.
Expressing that with the spread of artificial intelligence, governments will need to overhaul their regulations to maintain global financial stability, Gensler said that the SEC will be on the alert when this technology is used for purposes such as financial fraud and directing investors to certain products.
Pointing out that especially public companies should be careful not to mislead investors about the risks and opportunities that artificial intelligence can bring, Gensler explained that SEC inspectors can also benefit more from artificial intelligence in their surveillance, analysis and sanctions.
Gensler said he believes they need to closely evaluate AI so they can continue to promote competition, transparency and fair access to markets.
“SEC disappointed with Ripple decision”
Gensler, on the other hand, said the SEC was “disappointed” with the court ruling that Ripple Labs did not violate federal securities law by selling the cryptocurrency XRP.In December 2020, the SEC sued Ripple Labs, the company behind XRP, and its executives, accusing the company and its two executives of offering $1.3 billion of unregistered securities by selling the XRP that was launched in 2012.
Ripple has argued that XRP, a token developed to facilitate cross-border payments, is not a security.