Bank

Bitcoin ETF

DeFi

<ul>
 <li>The financial markets have begun to incorporate AI into various products and services.</li>
 <li>The use of AI in DeFi systems has the potential to complicate regulatory matters.</li>
</ul>
Concerning the use of AI in the financial markets, particularly decentralized finance, Kristin Johnson of the Commodity Futures Trading Commission (<a href="https://thenewscrypto.com/u-s-senators-demand-communication-logs-between-cftc-chair-and-ex-ftx-ceo/" target="_blank" rel="noopener noreferrer nofollow">CFTC</a>) has suggested measures including increased fines.
Johnson expressed her worries on artificial intelligence and its implications for deregulation of financial markets in a speech she gave at the Fintech and Blockchain Symposium co-hosted by Sidley Austin and Rutgers Law School.
Johnson stated:
<blockquote class="wp-block-quote">
 “Deploying AI in ecosystems running on blockchain technology raises novel issues for supervision, risk management, and compliance, as well as enforcement.”
</blockquote>
<h3 class="wp-block-heading" id="h-complicating-regulatory-matters">Complicating Regulatory Matters</h3>
The financial markets have begun to incorporate AI into various products and services, such as robo-advisers, compliance programs, and brokerage applications. Algorithmic and automated trading are two areas where <a href="https://thenewscrypto.com/defi-emerges-as-viable-distribution-channel-for-rwas-fathom-co-founder/" target="_blank" rel="noopener noreferrer nofollow">DeFi</a> may make use of AI, as per Johnson.
Regulators are worried about potential dangers associated with AI, including prejudice, manipulation, and fraud, as well as issues related to consumer protection. According to Johnson, one problem with DeFi is that, unlike conventional markets, it does not have a central party.
The Commissioner further added:
<blockquote class="wp-block-quote">
 “Decentralized autonomous organizations and the use of non-intermediated market structures by blockchain-based platforms may depart from these assumptions in important ways.”
</blockquote>
The use of AI in DeFi systems has the potential to complicate regulatory matters, especially when it comes to supervisory duties and responsibility for following important and long-standing rules like the <a href="https://www.occ.treas.gov/topics/supervision-and-examination/bsa/index-bsa.html#:~:text=Under%20the%20Bank%20Secrecy%20Act%20(BSA)%2C%20financial%20institutions%20are,(daily%20aggregate%20amount)%2C%20and" target="_blank" rel="noopener noreferrer nofollow">Bank Secrecy Act</a>, which is meant to combat the dangers of illicit financing and money laundering in our financial system.
<a href="https://www.cftc.gov/About/Commissioners/KristinNJohnson/index.htm" target="_blank" rel="noopener noreferrer nofollow">Johnson</a> urged the CFTC to tackle AI in general with a principles-based strategy. More severe punishments should be meted out to those who “intentionally” manipulate markets, commit fraud, or otherwise circumvent AI regulations.
Highlighted Crypto News Today:
<a href="https://thenewscrypto.com/sec-delays-decision-on-7rcc-globals-spot-bitcoin-etf-application/" target="_blank" rel="noopener noreferrer nofollow">SEC Delays Decision on 7RCC Global’s Spot Bitcoin ETF Application</a>

CFTC Commissioner Highlights Concerns Over AI Risks in DeFi

Table of Contents

TheNewsCrypto

Other articles published on May 4, 2024

Where Is Bitcoin Headed in May? Expert Points to Key Resistance Level That Must Break For Continu...

When Bitcoin falls, BTC miners suffer – Post-halving’s chronicles

Shiba Inu Maintains Uptrend in Volatile Market

Friend.tech Prepares for Version Two Launch and Airdrop, but Leaked Smart Contract Raises Controv...

Major Concerns for Altcoin as Founders Hold Majority Control: Understanding the Impact on Coin Va...

Sui Network Tokenomics Raises Concerns With 84% Control of the Founders

Join our free newsletter for daily crypto updates!