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SEC Chief Warns Unregulated AI Could Spark Financial Meltdown

SEC Chief Warns Unregulated AI Could Spark Financial Meltdown
SEC Chief Warns Unregulated AI Could Spark Financial Meltdown

Artificial intelligence, the increasingly powerful tech innovation, could plunge the financial system into crisis if regulatory measures aren't swiftly undertaken, warns SEC Chairman Gary Gensler.

Gensler emphasized the magnitude of the threat, suggesting that crisis stemming from AI is "nearly unavoidable" within a decade without intervention. The challenge for the SEC intensifies as the technological roots of potential market risks lie beyond its traditional jurisdiction. Financial systems increasingly depend on the same foundational AI models, most of which are developed by major tech companies that fall outside the SEC's direct oversight.

The SEC's recent regulatory proposal targets conflicts in predictive data analytics but fails to address this broader systemic risk. Meanwhile, cross-entity reliance on shared AI models remains a significant concern. Gensler's call for a collaborative regulatory approach highlights the dire need for an industry-wide strategy to guard against the destabilizing potential of AI. International cooperation, as seen in G20 pledges for responsible AI development, reflects the global consensus on AI's dual-edged impact on innovation and stability.

Gensler's forewarning of AI-triggered financial instability underlines the urgency for strategic, cross-regulatory frameworks to manage AI's advancement with foresight and prudence.

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