Gary Gensler Warns about AI’s Impact to Financial Systems, Doesn’t Touch on Cryptocurrency
Securities and Exchange Commission (SEC) Chair Gary Gensler has previously warned that artificial intelligence (AI) could lead to the next financial crisis. Gensler once again elaborated on this topic during a virtual fireside chat hosted by the non-profit advocacy organization Public Citizen on Jan. 17.
Gensler spoke in depth about how AI can manipulate markets and investors, warning against “AI washing ,” algorithm bias and more. As the conversation began, Gensler also clarified that the topics he would be addressing would only pertain to traditional financial markets. This was evident after the panel moderator asked Gensler if he “coined” the term AI washing, to which Gensler responded, “Well, you said ‘coin’ and this is a crypto free day, so it’s not that.”
Gensler then proceeded to explain that AI washing refers to investor or employee interest occurring when making claims about a new technology model. “If an issuer is raising money from the public or just doing its regular quarterly filing, it’s supposed to be truthful in those filings,” he said. According to Gensler, the SEC has found that when new technologies come into play, issuers must be truthful about their claims, detailing the risk and how those risks are being managed and mitigated.
The SEC Chair also noted that because AI is built into the fabric of financial markets, there needs to be ways to ensure that humans behind these models are not misleading the public. “Fraud is fraud, and people are going to use AI to fake out the public, deep fake, or otherwise. It’s still against the laws not to mislead the public in this regard,” said Gensler.
Gensler added that AI was to blame for a fake blog post that announced his resignation in July of
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