CFTC Commissioner Calls for Collaboration, Highlights Known Risks of AI and Crypto

CFTC Commissioner Kristin N. Johnson emphasized the need to "keep top-of-mind the lessons of the past and the benefits of well-honed regulatory tools" in response to Executive Orders issued on AI and crypto.  (See related coverage on the AI EO and related coverage on the digital assets EO.)

In an address at the University of Chicago Law School on the future of financial regulation, Ms. Johnson said that risks associated with AI remain, "particularly for regulators tasked with safeguarding the integrity and stability of financial markets and the global economy." She urged regulators to "understand, track, and be poised to address" risks associated with (i) cybersecurity, (ii) reliance on third-parties to create and manage AI and (iii) concentration of power in a limited number of AI providers.

On the digital assets EO, Ms. Johnson asserted that risks in the digital assets markets are "well known." She said it should be required "that any action to establish digital asset regulation include needed clarity regarding the application of rules and protections that safeguard the integrity of our markets." Ms. Johnson urged that digital asset market regulation should include measures on (i) segregation of customer assets, (ii) corporate governance and internal controls and (iii) compliance with AML/KYC laws.

Ms. Johnson called for continued conversations on both subjects and for the CFTC Division of Enforcement to create an AI Fraud Task Force. She called for a collective effort to ensure markets remain stable, trustworthy and globally competitive.