- SEC Chairman Gensler stresses the need for AI regulatory frameworks in FinTech.
- AI innovations in crypto, like trading bots and fraud detection, could face new compliance requirements.
- The global blockchain AI market is projected to hit $1 billion by 2030, growing 335% since 2021.
Chairman of the U.S. Securities and Exchange Commission, Gary Gensler recently highlighted alarming issues the SEC will have in keeping up with the rapid expansion of A.I. services in FinTech.
In a recent interview with Bloomberg, Gensler stressed the importance of a new regulatory framework for artificial intelligence.
Addressing the AI Challenge in FinTech
Gensler pointed to the intersection of AI with the insurance sector and the use of private letter ratings as areas requiring close scrutiny. He emphasized that the SEC is looking at these aspects carefully but underscored the broader goal of ensuring that capital markets and the public benefit from healthy competition.
One major concern he raised was the liquidity mismatch in banks versus the non-bank sector. Gensler explained that while banks transform liquidity and the maturity of deposits, the non-bank sector might have a better match between the maturity of liabilities and the assets they hold. This sector could better bear the illiquidity risk, though it is not without its challenges.
The Chairman also noted the progress the SEC has made in regulatory projects, with many proposals and adoptions completed over the past three and a half years. He highlighted ongoing work on rules around market structure, central clearing, and the segregation of funds.
Despite his focus on these critical tasks, Gensler refrains from commenting on specific products or projects that may be in front of the SEC staff or the five-member commission. His term runs until June 2026, and he is committed to advancing regulatory initiatives that benefit the investing public and ensure market resilience.
Correlations With the Cryptocurrency Market
Despite digital assets not being the topic of discussion, Gensler’s view on new regulatory frameworks for A.I. models can also have an impact on crypto.
The cryptocurrency eco-space has proven to be a stable ground for this type of technology to thrive. For instance, generative AI models have been used by blockchain firms to produce several innovations such as AI algorithms being used to analyze market conditions, AI-driven trading bots, fraud detection, and predictive maintenance in crypto mining.
In fact, the global blockchain AI market is expected to reach a value of almost $1 billion by 2030 – a 230% increase since 2021.
No one knows how a deepened regulatory state on AI firms could affect crypto industries. From increased operational costs to a more stable the potential outcomes are diverse and significant.
