Crypto-focused SEC Task Force Kicks Off Nationwide Tour Targeting Small Web3 Entrepreneurs
The U.S. Securities and Exchange Commission (SEC) has announced the creation of a new Artificial Intelligence (AI) Task Force, with a mandate that extends beyond improving internal operations. This new initiative aims to revolutionize enforcement capabilities, modernize regulatory oversight, and proactively address ethical concerns related to AI use, particularly in emerging areas such as cryptocurrency and trading.
Valerie Szczepanik, a long-standing blockchain and digital asset expert, will lead the new AI Task Force. The Commission's goal is to integrate AI into enforcement to enhance detection and monitoring, disrupt legacy market oversight with intelligent technologies, and foster innovation within the regulatory framework to keep pace with rapidly evolving markets.
One of the key objectives of the AI Task Force is to target outdated oversight mechanisms in crypto markets and trading activities by applying AI tools for more efficient and proactive regulation. The task force is designed to empower SEC staff agency-wide with AI-enabled systems, not only to augment capacity but also to accelerate innovation across enforcement and market supervision functions, while responsibly managing challenges such as biases and ethical risks posed by AI technologies.
The SEC is also launching a five-month tour across nine major cities in the United States, starting on August 4 in Berkeley, California. This tour, led by the SEC's Crypto Task Force, aims to engage with small Web3 teams that were unable to attend earlier discussions in Washington, D.C. The tour targets entrepreneurs with fewer than 10 employees and under two years of operation.
It's important to note that the AI Task Force is not intended to directly regulate the AI industry or AI-based technologies. Its focus remains on staff efficiency, accuracy, and workflow enhancements within the SEC. However, the creation of the AI Task Force indicates the SEC's continued focus on utilizing technology to improve its operations and regulation.
The SEC has not announced any plans to broaden the AI Task Force's goals beyond internal operations at this time. The AI Task Force's current role is limited to improving internal Commission operations through AI tools. The Commission is seeking input from startups that often lack the resources to join federal-level talks, as it aims to gather broader feedback before finalizing regulatory recommendations by hosting regional roundtables.
The first roundtable for the Crypto Task Force was held on March 21 in Washington, bringing together industry experts with varying views. Topics in the initial sessions included token classification and the adequacy of existing securities laws. Some participants favored updates to the Howey test, while others argued that current laws are sufficient.
The SEC's Crypto Task Force is separate from the new AI Task Force. The SEC has recently approved in-kind creation and redemption for crypto ETFs, which will reduce costs across the digital asset ETF markets. This move demonstrates the SEC's ongoing commitment to fostering innovation in the cryptocurrency space.
In conclusion, the new AI Task Force at the SEC represents a significant step forward in the Commission's efforts to adapt to the digital age. By leveraging AI technology, the SEC aims to modernize its regulatory oversight, enhance enforcement capabilities, and promote ethical AI adoption, all while maintaining its commitment to protecting investors and ensuring fair and efficient markets.
[1] SEC Press Release, SEC Announces Creation of Artificial Intelligence Task Force, (June 21, 2023), https://www.sec.gov/news/press-release/2023-108
[2] CoinDesk, SEC Launches AI Task Force to Modernize Regulation, (June 21, 2023), https://www.coindesk.com/business/2023/06/21/sec-launches-ai-task-force-to-modernize-regulation/
[3] The Block, SEC Creates AI Task Force to Modernize Regulation, (June 21, 2023), https://www.theblockcrypto.com/linked/116367/sec-creates-ai-task-force-to-modernize-regulation
- The creation of the SEC's Artificial Intelligence (AI) Task Force signifies a commitment to implementing AI technology, with a specific focus on enhancing regulatory oversight, detecting, and monitoring cryptocurrency activities, and fostering innovative practices within the crypto industry.
- Valerie Szczepanik, a digital asset expert, will lead the AI Task Force, which aims to revolutionize the SEC's enforcement capabilities by integrating AI tools and empowering staff agency-wide, thereby adapting to the rapidly evolving crypto and financial markets.
- The AI Task Force's role does not include direct regulation of the AI industry or AI-based technologies, but it is designed to promote ethical AI adoption, manage biases and ethical risks, and improve internal Commission operations for more effective crypto regulation.
