SEC Chairman Gary Gensler Speaks About Cryptocurrencies!

US Securities and Exchange Commission (SEC) Chairman Gary Gensler recently discussed artificial intelligence (AI) and crypto para discussed the difficulties of the regulations.

While both technologies are advancing rapidly, Gensler said regulatory frameworks are needed to keep pace with the digital revolution.

Speaking about the rise of artificial intelligence, Gensler compared the transformative impact of this technology to the emergence of the internet and even electricity. He said artificial intelligence has become an integral part of the financial industry, affecting everything from brokerage practices to investment advisories. However, the SEC has raised concerns about the ethical use of AI in finance, particularly the potential for conflicts of interest.

Gensler stated that by revealing the risks of excessive similarity of artificial intelligence models between companies, it could increase systemic financial risks if the technology fails. “If everyone relies on similar AI models, we may see a financial crisis in the future,” Gensler warned, touching on the potential dangers of widespread dependence on large cloud providers that form the basis of AI systems.

While fraud remains a significant concern, Gensler said using AI to defraud the public would still fall under the same legal framework as traditional fraud.

On the subject of cryptocurrency, Gensler reiterated that blockchain and decentralized ledger technologies, as introduced in Bitcoin’s 2008 whitepaper, are not inherently incompatible with existing securities laws. However, he stated that projects in the crypto space must comply with disclosure requirements and protect investors from conflicts of interest and fraud. He noted that the SEC remains committed to enforcing regulations, especially in an area where many investors have suffered losses due to lack of transparency and regulation. Gensler also acknowledged the possibility of new legal frameworks emerging to regulate the industry.

Responding to criticism that the SEC’s regulation of cryptocurrency relies on enforcement actions, Gensler supported the agency’s approach, arguing for the importance of robust laws and regulations. Reiterating the need to inform investors to protect investors and maintain confidence in capital markets, Gensler drew parallels with market conditions in the 1920s.

While Gensler’s term runs through 2026, his focus remains on lowering costs for investors, increasing market resilience, and advancing regulatory reforms across various sectors.

*This is not investment advice.