Securities Regulation Daily Wrap Up, AI NEWS—Executive Order, House Bill has AI debate growing, (Dec 12, 2025)

By Joe Cox, J.D.

President Trump’s executive order preempting state AI regulation and a recent House bill carving out a regulatory sandbox have both intensified AI discussion.

The discussion about regulation of artificial intelligence has taken a spike in intensity with recent actions. On December 11, President Trump issued an Executive Order—Ensuring a National Policy Framework for Artificial Intelligence—preempting state regulation of AI. In the White House press release, the Trump administration argued that the move was necessary to avoid a patchwork of differing regulatory approaches, to avoid ideological biases within AI models, and to prevent impingement on interstate commerce. An AI Litigation Task Force was established to challenge state laws inconsistent with the order. The order also seeks to tie compliance with funding, as states with “onerous AI laws” can be exempted from Broadband Equity Access and Development funding.

The reaction was swift from opposing parties. Consumer advocacy group Public Citizen released a statement criticizing the move. Co-President Robert Weissman called the order “mostly blunder” and noted that the President “cannot unilaterally preempt state law.” “We expect the EO to be challenged in court and defeated,” stated Weissman. “In the meantime, states should continue their efforts to protect their residents from the mounting dangers of unregulated AI.”

Likewise, Third Way issued its own statement criticizing the order. Director of Technology Ruth Whitaker stated that the order “overrides the will of the voters, state legislatures and even Congress by attempting to unilaterally eliminate AI safeguards by withholding BEAD funding and other federal resources.” Whitaker advocated for Congress to “establish a durable, bipartisan set of safety standards overseeing the development of AI.”

HR 4801 Controversy. That said, Congress has its own pending issues with HR 4801, a pending bill that would allow financial firms testing AI systems on customers to seek waivers to avoid compliance with consumer protection laws via a regulatory sandbox. That action has also been subject to extensive debate.

Consumer Reports in a press release and letter discussed three areas of concern with the bill: weakened regulatory oversight, insufficient consumer safeguards, and misaligned incentives. CR writes that the bill “would put consumers in harm’s way by weakening much needed regulatory oversight in the already high-risk, low-transparency space in which artificial intelligence exists.”

Electronic Privacy Information Center (EPIC) likewise criticized the bill in a press release as “putting consumers at risk of amplified discrimination, fraud, misinformation about financial services and products, financial loss, and more.” EPIC joined a coalition letter of 65 consumer protection, civil rights, labor, and technology advocacy organizations opposing the bill.

On the other hand, American Fintech Council (AFC) applauded the bill and other related measures in a press release and letter. AFC praised the bill for “pragmatic, bipartisan approach to supervised innovation that empowers regulators and the industry to collaboratively test and deploy AI tools in safe, structured environments.”

“H.R. 4801 remains a standard for a thoughtful, bipartisan framework that gives regulators the tools they need to understand emerging technology while advancing consumer protection, competition, and American leadership in financial innovation,” said Phil Goldfeder, CEO of AFC.

Companies: American Fintech Council; Consumer Reports; Electronic Privacy Information Center; Public Citizen; Third Way

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