Aug. 5, 2024 – 3:27 p.m. By Mark Schoeff Jr., CQ
A bipartisan group of lawmakers announced legislation in the House and Senate that would encourage financial firms to experiment with artificial intelligence to develop products and services by providing some protection from regulation.
The bill unveiled Monday would establish a “regulatory sandbox” at several agencies that gives firms leeway to “experiment with AI test projects” without having to worry about “unnecessary or unduly burdensome” regulations or to look over their shoulder for enforcement actions, according to bill language.
The sandboxes would be set up at the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, the National Credit Union Administration, and the Federal Housing Finance Agency.
The backers of the House version are Rep. French Hill, R-Ark., the chair of the House Financial Services Subcommittee on Digital Assets, and Rep. Ritchie Torres, D-N.Y., the ranking member on that panel.
The backers of the Senate version are Sens. Mike Rounds, R-S.D., and Martin Heinrich, D-N.M., two of the four senators who comprise the chamber’s Bipartisan AI Working Group. The other two members are Senate Majority Leader Charles E. Schumer, D-N.Y., and Sen. Todd Young, R-Ind.
Hill said in a news release that the measure would give the financial industry a safe space in which to get its arms around the quickly advancing technology.
“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 said.
The concept of an experimental regulatory safe harbor is one that has been promoted by some financial industry groups, such as the Financial Technology Association.
That group’s CEO, Penny Lee, said the legislative effort promoted AI innovation through “forward-leaning financial policies.”
“Regulatory sandboxes are vital tools for companies to innovate safely and develop products that benefit consumers, small businesses, and entrepreneurs,” Lee said.