If one is looking for some ironies, it may be argued that digital assets did not crash the banking system; banking runs crashed, or contributed to the crash, of the digital asset ecosystem.

The phrase "highly fact-specific" is troublesome when used as to the application of any governmental power, including financial regulation. "Highly fact-specific" could wind up being eccentric and not based on principles that can be readily generalized.

FSOC is an agency made up of the members of a single political party. There are no minority party participants in the agency to voice dissent; that raises the risk of highly political decisions that are not readily subject to challenge…

While the de-banking of digital assets is a significant issue, the larger question concerns the ability of financial regulators to deal with innovation. We are many years into the advent of digital assets as a financial product, yet there has been little of no progress in modifying existing rules to fit the product. In general, when nonbanks have developed interesting retail lending products, the response of the regulators has been to bemoan that the products are not provided by more heavily…

The worry is that the regulators will make the same types of mistakes with the regulation of AI as regulators made with digital assets--fail to adopt regulations that are appropriate to the product. In the case of AI, the demand that developers fully understand the logic of the systems is not possible. AI is not simply a more complicated logic tree, like an expert system with multiple branches. Much of AI is, at least at this point in its development, inherently a black box. If the…