Treasury Secretary Janet L. Yellen is set to outline significant concerns around artificial intelligence and digital assets before the Committee on Financial Services of the U.S. House of Representatives on Tuesday.
Yellen pointed out in the statement that the financial sector’s increasing adoption of artificial intelligence warrants attention. While AI promises to reduce costs and enhance efficiency within financial services, Yellen emphasized the need for financial bodies and regulators to bolster their oversight.
Concerns around AI, crypto
The secretary also underscored the Financial Stability Oversight Council’s concerns over potential market instabilities when it comes to digital assets. She cited specific risks, including the danger of runs on crypto-asset platforms, vulnerabilities stemming from crypto-asset price fluctuations, and the growth of platforms that operate without adherence to legal and regulatory standards.
Yellen called for the enforcement of existing regulations and urged Congress to pass new legislation aimed at regulating stablecoins and the spot market for crypto-assets that are not classified as securities. While she urged for cooperative efforts with Congress, the US constantly finds itself in a state of uncertainty regarding its rule-making for these sectors.
Other countries take the lead
In contrast, the European Securities and Markets Authority (ESMA) has made strides in this space by recently issuing two consultation papers. These documents request public feedback on establishing standards and guidelines under the Markets in Crypto-Assets (MiCA) regulation. In a move that suggests a more assertive regulatory approach, the EU has proposed stricter rules for foreign crypto firms.
Meanwhile, Hong Kong has taken a decisive stance on the matter. The region has mandated that unlicensed crypto firms cease operations by May 2024, demonstrating the need for specific guidelines despite being a ‘crypto hub.’
However, the digital asset regulations in the US remain fraught with uncertainty. While other global entities advance with clearer directives and frameworks, the US continues to circle in a redundant cycle of risk commentary without concrete progress to counter the risks.