Crypto regulatory affairs: AI accountability, CFTC and FCA

In this first October edition of crypto regulatory affairs, we will cover:

• Financial sector watchdogs call for accountability around AI
• US CFTC kicks off cryptoasset rulemaking push
• US Treasury withdraws proposed rules on unhosted wallets and mixers
• UK’s new crypto regulatory gateway opens

Financial sector watchdogs call for accountability around AI

Financial sector watchdogs call for accountability around AI

Over the past two weeks, prominent financial sector supervisors and policymakers have acknowledged the rapidly accelerating impact that artificial intelligence (AI) is having on the financial sector, and the opportunities and risks it brings.

In an article published on September 30, titled “Frontier AI and the question of governance,” Bank of England Governor Andrew Bailey highlighted these issues. According to Bailey, the use within the financial sector of AI that can engage in recursive, self-reinforcing learning and actions “risks reducing society’s ability to exercise meaningful oversight and intervention. The greater the capability of the system, the more important this question becomes.”

In Bailey’s view, this does not imply that the technology should be prohibited, and he warned against premature efforts to regulate such a fast moving set of innovations. He also acknowledged that AI can bring significant benefits to the financial sector, as well as other industries, such as greater efficiency, growth and prosperity.