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Kristin Johnson, Commissioner of the United States Commodity Futures Trading Commission (CFTC), has put forward three proposals aimed at regulating artificial intelligence (AI) technologies within U.S. financial markets.
During the Technology Advisory Committee meeting on May 2, Johnson outlined the CFTC’s agenda, which includes establishing a “principles-based framework” to assess AI-related risks in financial markets, imposing heightened penalties for intentional AI misuse, and forming a task force to evaluate and harmonize regulatory guidance on AI integration.
While government initiatives for task force creation and risk assessment are not unprecedented, Johnson’s proposal for increased penalties for AI-enabled crimes marks a notable departure from current regulations.
Johnson referenced U.S. Deputy Attorney General Lisa Monaco’s analogy, comparing AI to firearms in terms of enhancing the severity of crimes: “Like a firearm, AI can also enhance the danger of a crime.”
In response to this, Johnson argued for introducing heightened penalties for individuals who intentionally exploit AI for fraud, market manipulation, or regulatory evasion. She emphasized the need to deter bad actors from weaponizing AI to disrupt market integrity.
This initiative coincides with the recent appointment of Ted Kaouk as the CFTC’s first Chief AI Officer. Kaouk, previously serving as Chief Data Officer and Director of the Division of Data, brings expertise in leveraging AI for regulatory purposes.
In a related development, Representative Maxine Waters, ranking member of the Financial Services Committee, has recommended Kristin Johnson for the position of Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury. If nominated and confirmed, Johnson would play a pivotal role in shaping legislation and policies governing the U.S. financial market.
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