The United States was one of the first countries to sign a global convention to govern AI. These US AI regulations are timely and necessary because AI is evolving quickly and needs to be applied ethically, fairly, and safely.
For investors looking to dive into AI businesses, it’s important to understand the regulatory landscape. Staying in the loop on AI regulations in the US is important to stay safe and earn high returns on your investments. Here is a quick overview of US AI regulation in 2025.
The Future of AI Regulation: Key Changes and Predictions for 2025 and Beyond
The US approach to AI regulation might take a different turn in 2025. Here are some key regulatory changes to expect going forward:
1. AI Regulations May Change With New White House
The return of Donald Trump as US President in 2025 hints at new directions for AI regulation in the US. The administration had earlier criticized the past administration’s approach to AI regulation calling it a “dangerous Executive Order” on AI oversight. The goal is to replace it with policies that promote “AI development rooted in free speech and human flourishing.”
But if you dig deeper into the administration’s policy-making agenda, especially the Project 2025 report, there is a more subtle pattern. While the new administration is trying to reduce regulations in the interest of innovation, national security is still a top priority.
Key priorities include:
- Using AI in commerce and trade enforcement.
- Establishing specialized teams to oversee AI policies.
- Increasing export controls to keep foreign adversaries (especially China) out of the advanced US AI technologies.
This persistence in preventing China from having access shows that the administration considers AI a key driver of global influence. While pushing for lenient domestic regulation, the administration will likely keep it tight to ensure national security and technological supremacy at home and abroad. This double-edged approach means new laws will become more business-friendly, but crucial protections will stay.
2. Experts Predict the Bubble May Burst for AI in 2025
As 2025 unfolds, speculations of an “AI bubble” in tech are growing. Analysts notice that large investments in AI are yet to yield proportionate returns. Veteran investor David Roche predicts a bear market in 2025, partially due to smaller-than-expected rate cuts, a slowing U.S. economy, and an AI bubble. He equates today’s AI boom with the dot-com bubble and warns that deep market corrections are just around the corner.
However, some analysts have a more optimistic take on things. They say that strong earnings in the AI sector separate it from bubbles in the past and suggest a more resilient market. Nevertheless, AI keeps fueling technological change, but stakeholders must stay on guard. And we have to agree.
3. New Developments in New York and California Push Businesses Toward AI Transparency and Compliance
The recent California and New York legislative changes are pushing businesses to be more transparent and compliant when using AI.
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California’s AI Transparency Act
On 19 September 2024, Governor Gavin Newsom signed into law SB-942, the California AI Transparency Act. The law will be effective by January 1, 2026. It requires “Covered Providers,” meaning businesses with more than 1,000,000 monthly users, to disclose AI-based content. The Act will inform consumers that they’re engaging with AI-generated content. This transparency will promote ethical AI conversations.
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New York’s AI Layoff Reporting Requirements
New York has become the first state to include AI-driven layoffs reporting to its Worker Adjustment and Retraining Notification (WARN) Act. Organizations with 50 employees or more now have to declare the number of jobs lost due to AI automation. This law will track the effect of AI on employment and ensure that workforce changes are done responsibly.
Which US Agency Regulates Artificial Intelligence?
AI is being regulated for various reasons, but which US agency regulates artificial intelligence? Well, there isn’t a single agency solely in charge of regulating AI in the US. Rather, AI is controlled by a mix of federal and state authorities. With rapid AI adoption in recent years, state governments and key industries such as healthcare, finance, and defense have developed unique AI policies. This decentralized system involves many agencies and legislative bodies:
1. Federal Agencies
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National Institute of Standards and Technology (NIST)
NIST provides voluntary guidelines and standards to promote trustworthy AI systems.
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Food and Drug Administration (FDA)
The FDA regulates AI applications in medical devices and healthcare. This agency has authorized almost 1000 AI-enabled medical devices.
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Federal Trade Commission (FTC)
The FTC oversees AI use in consumer protection. They try to prevent deceptive practices and ensure data privacy, thus they regulate everything from customer service chatbots to facial recognition technology and so much more.
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Securities and Exchange Commission (SEC)
The SEC monitors AI in financial markets, especially in algorithmic trading and investment tools.
2. State Governments
Without comprehensive federal AI legislation, states are regulating some AI use cases and consumer rights. Here are some states making headway with AI regulation:
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Colorado
Colorado’s SB 21-169 bans discriminatory insurance based on external consumer information or AI models.
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Connecticut
The Connecticut Privacy Act (July 2023) protects the right of consumers to choose whether to consent to AI-based profiling in automated decision-making.
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Illinois
The Illinois AI Video Interview Act requires employers to inform candidates of AI usage and explain why it’s being used in assessments. It also protects candidates’ right to consent and restricts video sharing to authorized service providers.
3. Legislative Developments
By the end of 2024, at least 45 states and territories such as Puerto Rico and the Virgin Islands have introduced AI bills. One in three states have already passed laws on the use of AI. These figures show a growing awareness of the need for regulating this innovative technology. Given the complexity of the regulatory landscape, all levels of government and industry must collaborate to develop and deploy AI responsibly.
What Are the Common US AI Regulations?
Here are some popular US regulations on AI:
1. Federal Aviation Administration (FAA) Reauthorization Act
AI applications in aviation must be checked and scrutinized to ensure safety and efficiency. This legislation addresses worries about automation in air traffic management, autonomous flight systems, and other AI-based aviation technologies.
2. National Defense Authorization Act (NDAA) for Fiscal Year 2019
This act requires the Department of Defense to manage AI projects and integrate AI into national security. It involves creating an AI coordinator to run military AI projects and ensure ethical standards are followed.
3. National AI Initiative Act of 2020
This law restructures AI research and development in the US. It created the National Artificial Intelligence Initiative Office which is charged with coordinating a national AI strategy and encouraging government, academia, and industry collaboration.
4. White House Executive Order on AI
This order is called Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. It calls for the responsible use of AI across many industries. It highlights how innovation and risk management must be balanced to make the most of AI’s social and economic benefits
5. Blueprint for an AI Bill of Rights
This White House initiative outlines rules for equitable use and access to AI systems. It gives recommendations for making sure AI technologies do not support discrimination. It also ensures data privacy and transparency in AI decision-making.
Are the US AI Regulations the Same Across All States in the United States?
No, the US artificial intelligence regulation varies from one state to another. Federal initiatives can give broad directions, but states have established AI laws to cater to their local concerns. This decentralized approach causes regional differences in AI regulation.
California, for instance, has privacy laws (such as CCPA) that govern how AI systems handle users’ data. Illinois on the other hand, has the Biometric Information Privacy Act (BIPA), which protects AI-based biometric technology such as facial recognition.
These state-by-state differences are a hurdle for AI-powered companies as they have to deal with an extremely complicated regulatory framework. It also calls for federal action to align AI regulations US while allowing states the flexibility to address unique concerns.
How Do US AI Regulations Affect AI-Driven Businesses in the United States?
The US government AI regulation affects how businesses develop and operate their systems. Here are some opportunities and hurdles these regulations pose to businesses:
1. Increased Compliance Requirements
Businesses must ensure their AI systems meet all federal and state regulations. This usually means auditing for bias, data privacy, and transparency, especially in healthcare, finance, and employment.
2. Operational Costs
Complying with AI regulations US often means investing in compliance tools, legal counsel, and periodic system checks. Large organizations may also need to pay for dedicated teams on an ongoing basis.
3. Innovation Opportunities
Clear AI regulation in the US set the stage for companies to use the technology responsibly and inspire confidence in consumers and investors. Businesses that adhere to these laws distinguish themselves as good innovators and build a good market reputation.
4. Market Limitations
If the regulation of AI in the US varies from state to state, scaling operations across the country can be challenging. Businesses are forced to adapt AI systems to different state laws which slows down growth and productivity.
Conclusion
The AI US regulation encourages responsible use and helps consumers to trust in AI technologies. These laws might pose some challenges to AI-driven businesses, but it also opens them to opportunities for innovation.
To be fully compliant, you must keep up with federal, state, and industry regulations. But knowing these laws alone might not be enough. We can help you identify any compliance loopholes and create effective strategies to address them. And even when the rules change, we will support you all the way to ensure your business is compliant. Contact us today to learn more about our approach and sign up for our free AI newsletter so you never miss an update.
