Job losses, the death of human creativity, plagiarism, the annihilation of humanity—what else do we have to worry about when it comes to advanced artificial intelligence? Yes, SEC chairman says: A financial crisis is "almost inevitable."

U.S. Securities and Exchange Commission Chairman Gary Gensler told the Financial Times that the increasing use of artificial intelligence systems will almost certainly lead to a collapse of financial markets within the next decade.

Gensler warned of an almost inevitable crisis due to reliance on artificial intelligence models developed by technology companies. He also faulted the lack of diversity in the AI ​​tools currently used by financial institutions to monitor markets, provide advice, automate account openings and more.

Gensler said the solution is to introduce regulation to oversee generative AI models and how they are used by Wall Street entities, which have been adopting the technology in droves since the beginning of the year. But the head of the SEC acknowledged it would be a "cross-regulatory challenge."

"Frankly, it's a difficult challenge," Gensler told the Financial Times. "This is a difficult financial stability issue to solve because most of our regulation is for individual institutions, individual banks, individual money market funds, individual brokers; that's the nature of what we do. It's a cross-cutting [problem] and many institutions may be relying on the same underlying underlying model or underlying data aggregator."

Gensler's scenario isn't the first time technology has caused financial markets to collapse. As early as 2010, a British trader illegally manipulated the market by issuing a large number of false orders to the Chicago Mercantile Exchange from his parents' basement in London, triggering a "flash crash." This caused nearly $1 trillion to be wiped off the value of the U.S. stock market, which then immediately rebounded. Regulators said high-frequency trading algorithms contributed to the crash.

So far, AI companies have agreed to self-regulate and manage the risks posed by their technology, but governments have called for greater regulation. The EU's developing Artificial Intelligence Bill could force developers of generative AI tools to submit them for review before they are fully released. Meanwhile, the U.S. government is still reviewing the technology to determine what aspects require regulation.

The U.S. Securities and Exchange Commission (SEC) proposed new rules in July that would require broker-dealers and investment advisers to take certain steps to address conflicts of interest related to the use of predictive analytics to interact with investors. The purpose is to prevent companies from putting their own interests ahead of those of investors.

While companies like Morgan Stanley and JPMorgan Chase are using AI models to help traders and financial advisors, Goldman Sachs, Deutsche Bank and Bank of America all banned employees from using ChatGPT at work earlier this year.