DeFi
CFTC Commissioner Johnson Advocates for AI Governance in DeFi
At a symposium at Sidley Austin and Rutgers Law School focused on fintech and blockchain, CFTC Commissioner Kristin N. Johnson offered her thoughts on some of the challenges and concerns surrounding artificial intelligence (AI) in decentralized finance (DeFi).
Johnson highlighted that AI introduces complex issues in areas such as regulatory oversight, risk management and compliance, particularly when combined with blockchain technologies. She said DeFi’s inherent structure lacks a central oversight body, which differs from traditional financial systems and complicates regulatory enforcement.
Proposed measures for AI governance
In response to these concerns, Johnson recommended several measures to better manage the risks associated with AI in financial markets. Accordingly, it advocates for a principles-based regulatory approach to AI, highlighting the need for tougher sanctions for intentional misuse of AI in activities such as market manipulation and fraud.
His proposal therefore includes the creation of a “working group on combating AI-related fraud” within the CFTC. This task force would collaborate with other regulators like the Federal Reserve and the Securities and Exchange Commission to strengthen enforcement capabilities.
Integration and regulatory challenges
Johnson highlighted the difficulty of applying long-standing regulations such as the Bank Secrecy Act to DeFi systems, which are decentralized and operate without traditional intermediaries. This situation, she noted, blurs the lines of accountability and complicates the enforcement of compliance measures.
Additionally, the CFTC has shown its commitment to addressing these emerging technological challenges by appoint its first director of AI, Ted Kaouk. At the same time, the agency plans to host a “AI Day» to foster debate on how AI is reshaping financial markets and consider future regulatory strategies.
Additionally, Maxine Waters, ranking Democrat on the House Financial Services Committee, urged Biden to nominate Johnson as assistant secretary for financial institutions at the Treasury. Waters cited Johnson’s expertise in data privacy, AI and digital assets.
Maxine added, “In her role as Commissioner of the CFTC, Commissioner Johnson has prioritized maintaining the integrity of our financial markets. » If confirmed, her extensive experience in AI, data privacy and digital assets could influence future financial regulatory policies at the national level.
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