Artificial intelligence “could aid in breakthroughs,” acknowledged Commodity Futures Trading Commission Commissioner Christy Goldsmith Romero in a keynote address today, but she asserted that regulators must “manage risks so that we can receive these promises.” Romero’s remarks were the highlight of the first day of the annual Financial Services Conference, hosted in Washington, D.C., by the Consumer Federation of America.
Romero said AI regulation is a “critical issue,” explaining that “data and assumptions matter” with AI models. She cited “concentration risk” as one potential downside: because developing AI can be very expensive, we may rely on just a few models. “Excessive reliance on a few AI models could lead to herd behavior,” she explained, citing SEC Chair Gary Gensler.
The commissioner said that fair lending practices could also be affected as AI technologies come under fire for intrinsic bias based on imperfect training data. “Where a technology like AI is rapidly evolving, regulatory coordination is especially important,” she said. citing a recent executive order on AI from President Biden.
The commissioner also warned about potential conflicts of interest and risks from cryptocurrency trading platforms owning affiliates that also perform exchange and clearinghouse functions. More broadly, Romero also warned against rolling back reforms enacted after the 2008 financial crisis.
Christy Goldsmith Romero, a Commissioner at the Commodity Futures Trading Commission, addressed the potential risks of artificial intelligence and cryptocurrency in her keynote speech at the Financial Services Conference. She warns against the concentration risk that comes with relying too heavily on a few AI models, as well as potential bias in AI training data. She also cautions against allowing crypto companies to serve multiple functions, as this could lead to cascading losses and contagion risk. Goldsmith Romero also called on public interest groups to weigh in when regulators consider post-crisis rule changes. #AI #Cryptocurrency #Regulation #FinancialStability #ConsumerProtection
You can read more about this topic here: Decrypt: AI Brings ‘Great Promise and Great Risk’ to Financial Markets: CFTC Commissioner
