On 20 January 2025, United States Commodity Futures Trading Commission (US CFTC) Commissioner Kristin Johnson delivered remarks at the Global Blockchain Business Council’s 8th Annual Blockchain Central Davos, held alongside the 2025 World Economic Forum. Speaking on the theme Collaboration for the Intelligent Age, Johnson addressed the role of blockchain and artificial intelligence (AI) in shaping financial markets. She called for regulatory frameworks that balance innovation with oversight, emphasising the need for collaboration among regulators, market participants, and policymakers.
Commissioner Kristin Johnson outlined the rapid evolution of financial technology, with blockchain and AI driving changes in market structure, automation, and risk management. She said that while these technologies offer efficiency and accessibility, they also bring challenges related to fraud, manipulation, and systemic risks. She supported strengthening regulatory frameworks to ensure digital asset markets operate with transparency and accountability.
She noted that last year, the US CFTC issued a request for information (RFI) on AI in financial markets, alongside similar initiatives by the US Department of the Treasury and other federal agencies. These efforts, she said, are essential for understanding the use cases, benefits, and risks of emerging technologies. She also called for a more structured regulatory approach, including an interagency task force to oversee AI and digital assets.
Digital assets and AI have reshaped financial markets, creating new investment opportunities while raising concerns about fraud, security, and regulatory gaps. The rise of decentralised finance (DeFi) and the integration of AI in trading strategies have made financial markets more complex, requiring regulators to adapt their oversight mechanisms.
Commissioner Kristin Johnson said that while the US CFTC and other regulatory agencies have taken steps to understand these developments, more structured engagement is needed. She highlighted the importance of a proactive regulatory approach that involves industry leaders, academics, and international regulators in shaping policies that address risks without stifling innovation.
Over the past year, US financial regulators have intensified efforts to study AI and digital assets. In 2024, the US CFTC and US Department of the Treasury issued separate RFIs to gather information on the use of AI in financial services. The Federal Reserve, the Office of the Comptroller of the Currency, the US Securities and Exchange Commission (US SEC), and other agencies have also engaged in discussions on AI regulation.
In response to these initiatives, Johnson advocated for an interagency task force to oversee AI and digital asset regulation. She reiterated this call at the Davos event, emphasising that coordination among regulators is necessary to provide clear guidance to market participants. She also highlighted the need for enhanced supervisory resources, noting that the US CFTC has seen an increased regulatory burden without a corresponding expansion in resources.
Johnson called for deeper engagement between regulators and the financial industry to ensure that regulatory frameworks reflect market realities. She said that self-regulation should remain a core value but must be complemented by strong oversight mechanisms. She stressed that digital asset firms should be held to the same standards of financial integrity as traditional institutions, particularly in areas like anti-money laundering (AML) compliance and fraud prevention.
She also advocated for the creation of an AI Task Force within the US CFTC’s Division of Enforcement. This unit, she said, should be led by experts with deep knowledge of AI-based financial crimes. She argued that the financial industry must work with regulators to combat fraudulent schemes that exploit AI to manipulate markets or target investors.
Commissioner Kristin Johnson acknowledged that regulatory changes will take time but urged immediate action on key priorities. She said that agencies should begin formalising interagency coordination on AI and digital assets in the coming months, with the goal of establishing clear regulatory guidelines by the end of the year. She also called for an expansion of the US CFTC’s resources to enhance its ability to oversee digital markets effectively.
She emphasised that while legislative changes may take longer, agencies should use their existing authority to enforce stronger safeguards in digital asset markets. The AI Task Force, if created, could begin operations in the near future, focusing on fraud detection and enforcement in AI-driven financial schemes.
(Source: https://www.cftc.gov/PressRoom/SpeechesTestimony/opajohnson14)
