- The CFTC Commissioner Johnson expressed her concerns regarding AI and how they relate to DeFi in a speech that she gave on Friday.
- Democratic ranking member of the House Financial Services Committee Maxine Waters, D-Calif., urged President Biden to appoint Johnson, a fellow Democrat, to the position of Assistant Secretary for Financial Institutions at the Treasury Department in a letter she wrote him on Thursday. Commissioner Johnson said he would not comment.
Kristin Johnson of the Commodity Futures Trading Commission put out suggestions to handle artificial intelligence in financial markets, including decentralized finance, including stiffer fines.
During the Sidley Austin and Rutgers Law School Fintech and Blockchain Symposium, Commissioner Johnson expressed her worries regarding artificial intelligence and its implications for DeFi.
According to Johnson on Friday, implementing AI in blockchain-powered ecosystems creates new challenges for oversight, risk management, compliance, and enforcement.
Artificial intelligence has been incorporated into financial markets, encompassing robo-advisers, compliance programs, and brokerage apps. AI can be applied to algorithmic and automated trading in DeFi. Regulators are concerned about prejudice, customer protection, manipulation and fraud, and other hazards associated with AI in general.
According to Johnson, one thing that sets DeFi apart from typical marketplaces is that it lacks a central party.
First of all, according to Johnson, traditional financial laws and regulations frequently presuppose particular organizational or market structures. These presumptions may be significantly deviated from by decentralized autonomous organizations and blockchain-based platforms’ use of non-intermediated market structures.
The use of AI in DeFi systems has the potential to complicate regulatory matters, especially when it comes to supervisory duties and accountability for adhering to important laws like the Bank Secrecy Act, which was created to combat the risks of money laundering and illicit finance in our financial system.
Johnson’s suggestions for AI
Johnson demanded that the CFTC tackle AI in general with a principles-based approach. Increasing the sanctions for people who “intentionally” utilize AI for fraud, market manipulation, or rule-breaking is one of those recommendations.
According to Johnson, dishonest actors who would use AI to break our regulations need to be made aware of their actions and adequately dissuaded from utilizing AI as a tool for fraud, market manipulation, or other activities that compromise the integrity or functioning of our markets.
Johnson also suggested forming a “AI Fraud Enforcement Task Force” that would include of investigators and attorneys from several divisions within the enforcement division of the CFTC. She also suggested creating an interagency task team with representatives from the Securities and Exchange Commission and the Federal Reserve as well as other agencies.
Ted Kaouk, the CFTC’s first top AI officer, was appointed a few days prior to Johnson’s speech, and the agency is preparing to host “AI Day” next week to discuss how regulators should handle AI.
Commissioner Johnson, will you be visiting Treasury?
Democratic ranking member of the House Financial Services Committee Maxine Waters, D-Calif., urged President Biden to appoint Johnson, a fellow Democrat, to the position of Assistant Secretary for Financial Institutions at the Treasury Department in a letter she wrote him on Thursday.
According to Waters, Johnson has shared her knowledge on a variety of subjects with the committee, including digital assets, AI, and data privacy.
According to Waters, Commissioner Johnson has made upholding the integrity of our financial markets a top priority in her capacity as CFTC Commissioner. She has campaigned for strict margin, collateral, and capital requirements to be adopted by the Commission. In addition, Commissioner Johnson is spearheading the CFTC’s efforts in the field of artificial intelligence (AI) and urging the Commission to carefully consider whether new regulations are necessary or if the current ones are adequate.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
