Rep. Maxine Waters (D, CA), the top Democrat on the House Financial Services Committee, says AI is ahead of Congress’s ability to regulate it and lawmakers need to move quickly.
“We don’t know all the dangers of artificial intelligence,” Waters said in an exclusive interview with Yahoo Finance on Thursday. “We don’t know what creations they might do, and I think we have to be cautious. We have to be very careful. We have to have regulations. We should start now.”
Waters is asking House Financial Services Committee Chair Patrick McHenry (R, NC) to hold a hearing as soon as possible on Microsoft’s ChatGPT and other advances in artificial intelligence, as well as any risks to the finance and real estate sectors.
“[We need] to make sure that consumers aren’t being exploited, that we get the truth, and that bias, already in the algorithms, wouldn’t be what would cause problems in AI, we really need to start making sure we have regulations that protect everyone,” Waters said.
Waters told Yahoo that he hasn’t heard back from McHenry. Laura Peavey, a Republican spokeswoman on the House Financial Services Committee, said Waters “is aware that we discussed holding a committee hearing on artificial intelligence in the fall.”
Waters says he’s leaning towards the idea of creating a separate agency.
“I think this technology is so new and so different, and we need to teach people about chatbots and the black box and all that,” Waters said. “We really need a separate agency to have the necessary regulations for this new technology.”
Waters cited the position of the Consumer Financial Protection Bureau, which said AI technologies still need to comply with existing consumer protection laws.
Earlier this year, the agency released a policy statement explaining what constitutes misuse of AI technology after it took more action in 2022. One ruled that digital marketers who use algorithms will be required to Consumer Financial Protection Act and violators will be held liable.
Waters is especially keen on making sure AI doesn’t adopt biases that harm certain types of consumers. A congressional task force on AI has raised ethical and legal concerns related to algorithmic bias and discrimination, particularly if automated programs don’t work as intended or adversely affect members of the protected classes.
The task force found that these technologies can incorporate historical inequalities in financial services and real estate markets through the use of data that reflect underlying bias or discrimination.
“Very close” on the stablecoin bill
Waters also said in Thursday’s interview that Democrats and Republicans on the House Financial Services Committee are “very close” to agreeing on bipartisan legislation to govern stablecoins, but not quite there when it comes to regulating cryptocurrencies in general.
“I think we can get a bipartisan piece of legislation that guarantees [with] stablecoin companies have the resources they claim to have to protect stablecoin consumers [are] on the way to some chance of getting the kind of regulations we need,” Waters said.
Waters had worked closely with McHenry on a bill to regulate stablecoins, but it fell apart when Republicans took control of the House and the two sides started fresh. Committee Republicans have incorporated some of the Democrats’ concerns into a new draft of the bill, although there are still some outstanding concerns.
But when it comes to a broader discussion draft for an overall framework for regulating cryptocurrencies, Waters says “there is still a lot of work to be done.”
“I know Mr. McHenry is trying to come up with other efforts to manage cryptocurrencies, but we’re certainly not there yet,” Waters said.
The bill aims to shed light on gaps between Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) rules. It also seeks to address what companies must do to register with the SEC, and requires the SEC to write new custom rules to govern cryptocurrencies.
The bill also seeks to clarify a long-standing issue for the crypto community as to what criteria would make a crypto token classify as a commodity or as a security. Provides CFTC with jurisdiction over digital commodities and clarifies SEC jurisdiction over digital assets offered as part of an investment contract.
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