Artificial intelligence (AI) technology has emerged and expanded wings quite rapidly. It went ahead so fast that it surpassed almost every other technology in the present times. With such a rapid transition comes responsibilities for existing sectors to adapt such that it does not affect the existing operations. The financial sector is one such space likely to get disrupted by the emerging technology and SEC chair Gary Gensler has to say something about it.
For an upcoming testimony on September 27, Gary Gensler will stand before the United States House of Representatives Committee on Financial Services. Among other subjects to be covered in the testimony, the SEC chair included the issue of the use of artificial intelligence in financial advisory services.
According to Gensler, companies are likely to command AI tech to bring out the best possible prediction for the benefit of their customers. However, the predictive AI tool is likely to consider the company’s interest as well. So the use of technology like artificial intelligence might result in a conflict of interest.
Gary Gensler showcases concern regarding the potential conflict of interest and suggests that companies should look toward resolving the issue. It should be one of the priorities for financial advisory firms to counter any such possibility.
However, the SEC chair did not have only a negative portrayal of the technology. Rather, he thinks that if used properly, artificial intelligence can result in disruption in the financial sector.
The technology can bring results in terms of “greater financial inclusion and enhanced user experience.”
Gary Gensler’s Second Testimony Before Congress This Month
The hearing scheduled to take place on Wednesday, September 27, will be the second testimony of Gary Gensler before Congress this month. In his previous testimony, he reiterated his stance on crypto security and advocated that the Securities and Exchange Commission (SEC) should handle the burgeoning asset class.
The testimony consisted of Gensler calling out the crypto industry’s “wide-ranging noncompliance” with the existing securities law. He stated that the industry’s not following the rules results in problems that are visible in the markets. To make his points more clear, he even compared the current decentralized financial markets with the traditional financial markets in the 1920s when federal securities laws were yet to be introduced.
Though Gary Gensler seeks the jurisdiction of the cryptocurrency industry to be kept by the SEC, the recent losses of the agency against crypto companies tell a different story. In the past several months, the securities agency lost lawsuits against companies like Ripple and Grayscale.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/09/27/financial-advisors-using-ai-may-conflict-client-interests-gensler/