The US Securities and Exchange Commission (SEC) is moving toward closer scrutiny of companies operating in the artificial intelligence sector. The regulator is checking how fully and accurately such companies disclose information about their risks and financial performance.
As stated by David Woodcock, director of the SEC's enforcement division, the agency is paying particular attention to the large-scale expenses of AI companies, as well as possible circular deals — schemes in which the revenue of some market participants is generated through purchases from others. Such structures can artificially inflate growth figures and fuel the formation of a bubble in the artificial intelligence sector.
According to the regulator's representative, the key task of the supervisory authority is to ensure transparency for investors and protect them from distorted data about the real state of the business. The focus is on both public reporting and the nature of transactions between affiliated companies, which may mask real financial risks.
What this means for the market
The SEC's active interest in the AI sector reflects growing concern among regulators and market participants about the sustainability of the current rally in technology assets. Circular deals and aggressive investment in AI infrastructure have already become the subject of broad discussions about how justified the current valuations of companies in the sector are.
Increased oversight may lead to stricter disclosure requirements and, as a result, to a reassessment of risks by investors. For the cryptocurrency market, which is closely tied to the artificial intelligence narrative, this is a signal of the need to more carefully evaluate projects whose market capitalization rests on the hype around AI.
Cryptalist analysis: The SEC's actions reflect a systemic shift in regulators' approach to the AI sector — from an observational stance to active enforcement. For the market, this means an increased likelihood of a correction in the segment of AI assets and related crypto projects if signs of fictitious revenue growth are identified. Investors should prepare for a period of heightened volatility and stricter scrutiny of fundamental metrics.