Virtual Assets Regulatory Authority CEO Hamad Alahmadi is sounding the alarm: the pace of AI adoption in finance is outpacing regulators.
Racing Against the Clock
Financial centres clinging to paper rulebooks (PDFs) have almost run out of time. Regulators who modernise will be the ones shaping the future of finance. Unlike most industries, which are passive recipients of AI’s benefits, financial regulation is not a spectator sport. Regulators are simultaneously being transformed by AI and deciding how much of its advantages they’re willing to let through.
The warning comes as regulatory frameworks worldwide struggle to keep pace with the rapid advancements in AI-powered finance. Virtual Assets Regulatory Authority’s (VARA) CEO, Hamad Alahmadi, is cautioning that this lag in regulation could have far-reaching consequences.
According to Alahmadi, supervisors who fail to adapt to the changing landscape risk being left behind. “Those who don’t modernise will be marginalised,” he warns. The stakes are high: a single misstep could undermine trust in the entire financial system.
The Regulators’ Catch-22
Regulators are both the beneficiaries and gatekeepers of AI adoption in finance. On one hand, AI is streamlining regulatory processes, freeing up resources for more strategic oversight. On the other hand, regulators are responsible for ensuring that AI-driven innovations comply with existing laws and regulations.
This dual role creates a Catch-22. Regulators must balance the need for innovation with the need for caution, all while navigating the complexities of AI regulation. The pressure is mounting: with each passing day, the gap between regulatory frameworks and emerging technologies grows wider.
A New Era of Finance
For Alahmadi, the writing is on the wall. “The supervisors who modernise will be the ones who inherit the next era of finance.” Those who fail to adapt risk being left behind in the dust. As AI continues to reshape the financial landscape, one thing is clear: only regulators who keep pace with technological advancements will be able to unlock its full potential.
What this means: Regulators have a narrow window to modernise their frameworks and keep pace with AI-driven innovations. Those who fail to adapt will be left behind, undermining trust in the financial system and stifling innovation.
