Congress SEC debate about the use of artificial intelligence in the financial industry is growing stronger due to the efforts made by U.S. legislators towards regulating the use of AI technologies used in investment.
A team of Democratic representatives in Congress has asked the SEC to reveal its plan for regulating investment agents powered by AI technology.
A letter written to SEC Chairman Paul Atkins brought up some issues regarding investors’ protection and oversight of the markets as AI technology becomes more prevalent in investing decisions.
According to their letter, AI technology is becoming increasingly common in financial markets, and without any precautions being taken, there can be some dangers.
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Congress SEC Concerns Over AI-Powered Investing
These AI trading robots have been programmed to analyze market data and make trading decisions. Currently, these services are becoming easily available via major financial service providers, which enable ordinary investors to use AI-powered decision-making in their investing.
The lawmakers realized that the technology was going to go beyond just regular stock trading and include cryptocurrency, options, futures, and event contracts. Therefore, they feel that the review of the AI trading tools by the Congress SEC has become even more relevant.
As per the letter, many of the AI systems are currently assisting the users in making important investment decisions without being within the securities regulatory regime. This issue has created apprehensions that the current regulatory structure is not enough to protect the investors.
Crypto Markets Could Be Impacted
The crypto industry will become one of the biggest industries influenced by the advent of AI investments. With the continued use of automation systems on crypto asset platforms, the regulators may encounter some difficulties.
Coinbase has launched a trading assistant, which is AI-driven and part of its trading platform, and it says that it is like a financial advisor that has been registered with the SEC and CFTC.
According to lawmakers, the rise of such applications underscores the necessity of having a wider discussion in Congress on how artificial intelligence is to be monitored.
Yet another issue relates to the question of accountability. The disclaimers of many AI investment platforms claim that the recommendations generated by AI algorithms may not be accurate, and there is no way to understand how the decision was made.
The lawmakers have requested that the Congress SEC reply by July 31 with information regarding the existing regulations, the requirement for registration, and whether the agency requires more power from Congress.
The results of the Congress SEC investigation may prove to be a very important factor in regulating the use of AI in investment and cryptocurrencies.
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