The Commodity Futures Trading Commission's Kristin Johnson proposed recommendations such as heightened penalties to address artificial intelligence in financial markets, including decentralized finance.
AI has been integrated into financial markets, including brokerage apps, compliance programs and robo-advisers. In DeFi, AI can be used in automated trading and algorithmic trading. AI in general has raised concerns among regulators over risks such as manipulation and fraud, bias and customer protection.
"Bad actors who would use AI to violate our rules must be put on notice and sufficiently deterred from using AI as a weapon to engage in fraud, market manipulation, or to otherwise disrupt the operations or integrity of our markets," Johnson added.