AI Regulation, Investing and Financial Markets
Bits of Signum | 11.29.23
Signum Growth, alongside our sister company, Signum Global Advisors, had the privilege of hosting two discussions on Artificial intelligence this week. We focused on US policy and the use of AI in financial services and investing. We want to thank Co-Founders Mark Beall, CEO, and Edouard Harris, CTO, of Gladstone AI, for driving a stimulating conversation on the many national security threat nuances of AI systems. We also thank Dr. Songyee Y.oon, President of NCSOFT and Founder of its AI Center, who has spent more than two decades in AI, having completed her PhD in Computational Neuroscience at MIT in the year 2000. Despite her highly technical background, Dr Yoon argued that many of these challenges are human-first, not tech-first, and that we already have many applicable laws in the US. There are legal ramifications for insider trading and market manipulation using any tools, including those which employ AI.
A big idea - many participants voiced concerns over the future regulatory backdrop for AI in the US, referencing the country’s inability to convene on a regulatory framework for crypto. In short, many are concerned the same gridlock might occur, and we simply do not have time. Driving innovation out of the US is a concern, but the stakes for AI are much higher - we are talking about national security threats. Four years ago, Signum Growth set a goal to find a clear regulatory path in crypto. We diligently met with the SEC dozens of times and found the staff to be incredibly knowledgeable and articulate on the topic. In the end, we were able to find a path for the Web3 Foundation and Polkadot, but realistically, it was not scalable for smaller projects or individuals. Also in the end, there was no law upon which to depend. And while there was a lot of hype around the judicial process saving the day, it was only a matter of time until different judges reached different conclusions on the same topic. This leaves us with the legislative process and Congress - even though the timeline is lengthy, perhaps for AI, we should simply go straight to new lawmaking?
As an example of continued challenges in regulating crypto, Politico last night broke the news that the US Treasury Department has submitted a proposal to the Senate Banking Committee to expand its powers under existing BSA and IEEPA provisions to encompass most actors in the industry. It’s been described as “the broadest expansion of powers since the Patriot Act” at the same time that many developers are simply asking for standard guidelines on how to use this technology to innovate within the US.
Back to the topic of AI investing and regulation, our two plus hour discussion was full of insights and ideas that we believe will drive action. Please let us know if you would like to join the next discussion!