US SEC Chair Warns "AI Could Trigger Financial Crisis Within 10 Years"

The Chairman of the U.S. Securities and Exchange Commission (SEC) has issued a warning that a new financial crisis could arise due to threats to financial stability posed by artificial intelligence (AI).

On the 15th (local time), Gary Gensler, Chairman of the U.S. SEC, stated in an interview with a British media outlet, "Without swift intervention by authorities, it will be impossible to avoid AI triggering a financial crisis within the next 10 years." He urged regulators to quickly find ways to manage the financial stability risks caused by the concentration of power in AI platforms.

[Image source=AFP Yonhap News]

He also made it clear that the potential risks of AI, which could impact Wall Street as a whole, originate from technology companies that are beyond the reach of supervisory agencies, making it a particularly difficult challenge. He said, "Most regulations concern individual institutions, banks, securities firms, and individual money market funds (MMFs), so addressing financial stability issues caused by AI will not be easy," adding, "Honestly, it will be a tough challenge."

Amid the explosive growth of AI, Wall Street is now being tested on whether it can maintain the stability of the financial system. On Wall Street, AI technology is being actively utilized in various ways, including robo-advisors that create personal asset management strategies, AI-based account opening consultations, and brokerage apps that automatically trade stocks according to algorithms.

Not only the U.S. securities authorities but also competition authorities and lawmakers are sharpening regulatory measures against AI. In July, the U.S. Federal Trade Commission (FTC) launched an investigation into OpenAI, the developer of ChatGPT, which sparked the generative AI craze, to determine whether it violated consumer protection laws.

The FTC at that time demanded OpenAI to provide detailed statements on all cases where complaints were received regarding false, misleading, or disparaging statements made to consumers. The Washington Post (WP) assessed the FTC’s investigation of OpenAI as "the strongest regulatory threat OpenAI has faced since it started its business."

The White House plans to announce an executive order related to AI regulation within this year, and the U.S. Congress has recently begun discussions on AI regulatory proposals to support this effort.

This content was produced with the assistance of AI translation services.