A bipartisan group of lawmakers introduced a bill in both the House and Senate that would allow financial federal agencies to experiment with artificial intelligence.
“The Unleashing AI Innovation in Financial Services Act is designed to foster innovation and economic growth by providing a controlled environment where new financial products and services that use AI can be tested,” said Sen. Mike Rounds, R-S.D., in an August 5 news release.
Rounds introduced the bill alongside Sen. Martin Heinrich, D-N.M., Rep. French Hill, R-Ark., and Rep. Ritchie Torres, D-N.Y., as a way to promote AI in the financial services industry.
Specifically, the bill would establish regulatory sandboxes, allowing “regulated entities to experiment with AI test projects without unnecessary or unduly burdensome regulation or expectation of retroactive enforcement actions,” according to the bill text.
Such sandboxes would be created at the Federal Reserve, Securities and Exchange Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, National Credit Union Administration and the Federal Housing Finance Agency, according to the news release.
“Regulated entities would apply through their primary regulator and must be able to demonstrate the project will serve the public interest (including consumer projection), enhance efficiency or increase competitiveness and not present a systemic risk to the financial system,” the news release states.
Torres said this will “encourage the use of new AI technology in the financial services sector while maintaining regulations that protect the public,” according to his statement in the news release.
“This is a pivotal step to allow both government and the private sector to collaborate and learn together, as the U.S. must lead in the development and use of AI technology,” Hill added in the release.
The SEC issued an AI-focused proposal back in July 2023, which would require investment advisers and broker-dealers to "eliminate or neutralize" conflicts of interest that arise in investor interactions from the use of certain technologies, including AI.
However, after facing significant pushback, the SEC said it plans to reissue the proposal later this year, according to its latest regulatory agenda.
