In brief
- CFTC Commissioner Kristin Johnson sees AI as a double-edged sword for crypto, offering benefits but also potential risks.
- Johnson advocates for stricter penalties against AI-enabled fraud, citing a case where scammers used claims of "AI-enhanced" Bitcoin strategies to defraud over 23,000 victims.
- Johnson praised Trump's CFTC chairman pick Brian Quintenz, and suggested that industry-specific regulation is now more likely to advance through Congress.
CFTC Commissioner Kristin Johnson believes that artificial intelligence can offer huge advantages for the crypto sector—but it may also exacerbate the risk of fraud.
Speaking at DigiAssets 2025, Johnson said machine learning and neural networks are now analyzing vast amounts of data in real time, including price action and social media sentiment.
While she praised AI's potential for speeding up settlement times and helping firms achieve compliance, Johnson warned that these models can hallucinate "or lack the ability to comprehend certain real-world roadblocks."
Risks surrounding bias and data privacy breaches were among the other threats Johnson highlighted—and during her speech at the London conference, she warned that AI has the potential to cause consumers harm.
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"It becomes really concerning when AI is used to manipulate market participants or manipulate markets directly," Johnson said.
“Heightened penalties”
The CFTC commissioner stressed that she has long pushed for "heightened penalties" for fraudsters who use AI to engage in criminal conduct and deceive unsuspecting consumers.
She highlighted one case where a scammer claimed he had an "AI-enhanced" Bitcoin investment strategy, with an automated bot that would facilitate exceptional returns. More than 23,000 victims were identified, with the perpetrators subsequently ordered to repay $1.7 billion in restitution.
In a later Q&A session, Johnson—who announced in May that she will step down from her role at the CFTC later this year—praised Trump's pick for CFTC chairman Brian Quintenz, who has also previously served as a commissioner. Quintenz still has yet to be confirmed, following a Senate hearing last week.
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"I know Brian well," she said. "I think he understands the ropes and how the commission works—but most importantly, he has a tremendous sense of the value that the commission can bring to markets."
Johnson also pushed back against the notion that the U.S. has performed "a complete 180" when it comes to crypto policy, but conceded that we are now more likely to see industry-specific regulation move through Congress.
"That, I would say, is definitely a different outcome than what we saw during the previous administration," she added.
Edited by Stephen Graves
