SEC’s Gary Gensler Sounds Alarm on AI’s Impact in Finance
Gary Gensler, the head of the Securities and Exchange Commission (SEC), has expressed concerns that the proliferation of AI technology could potentially lead to a financial crisis in the near future.
In an interview with the Financial Times, Gensler highlighted the complexities of regulating AI in the financial industry due to the widespread use of shared base models.
Moreover, these models may not be developed by financial institutions themselves but rather by technology companies operating outside the purview of regulatory bodies like the SEC and other financial watchdogs.
Gensler emphasized the unique challenge posed by this situation, as traditional financial regulation typically focuses on individual institutions, banks, money market funds, and brokers. However, the advent of AI introduces a horizontal dimension where multiple institutions might rely on the same foundational model or data aggregator.
This raises concerns about the concentration of power, especially when key base models are controlled by major tech companies with extensive cloud infrastructure.
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Gensler warned of the potential for herd behavior among financial firms if they all adopt the same AI models, which could ultimately contribute to a future financial crisis. He suggested that post-crisis analysis might reveal a single data aggregator or model that had been heavily relied upon, leading to a “Eureka!” moment.
To address these challenges, Gensler has initiated discussions with the Financial Stability Board and the Financial Stability Oversight Council, recognizing that this issue transcends the boundaries of individual regulatory bodies and requires a collaborative approach to address this cross-regulatory challenge.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
