AI Regulation: A FINRA for Frontier Models?
by
July 21, 2026
So far, the Trump administration has adopted a mostly hands off approach to federal AI regulation, but that’s left it in the position of having to react to the implications of the latest developments in frontier models through the ad hoc issuance of executive orders addressing the concerns those models raise. It’s becoming apparent, perhaps even to some in the administration, that this reactive approach to regulation is no way to run a railroad. This Bloomberg Law article says that the administration is looking at a possible alternative approach:
The Trump administration is considering plans for an independent regulator to vet the safety of artificial intelligence models with industry input, after Silicon Valley leaders complained about the ad-hoc nature of recent US moves to slow the release of cutting-edge AI systems.
Treasury Secretary Scott Bessent helped develop the proposal, which would create an independent regulatory agency for AI that would report to the Securities and Exchange Commission, similar to the Financial Industry Regulatory Authority, according to people familiar with the matter. The plan is now being reviewed by White House Chief of Staff Susie Wiles, said the people, who spoke on condition of anonymity because it has not been made public.
The article points out that the proposal broadly aligns with the approach outlined by Google DeepMind co-founder and CEO Demis Hassabis in a recent Substack post. This excerpt lays out some of the details of what he has in mind:
The US is well positioned, given its economic and technical standing, to take the first step in developing such a framework. It could establish a new Standards Body modelled on a federally overseen public-private partnership or self-regulatory organisation, much like the Financial Industry Regulatory Authority (FINRA), with a board that includes independent leading technical experts and open-source representatives. Funding would need to be substantial and likely mostly come from industry, in order to attract world-class technical talent and provide the necessary compute resources for large-scale testing.
The Standards Body would be responsible for developing assessment protocols and working with appropriate federal agencies and the US National Labs to conduct testing in areas relevant to national security. A model would qualify as ‘Frontier-class’ if it meets certain thresholds on a set of benchmarks determined by the Standards Body and regularly updated to keep pace with evolving AI capabilities. Organisations with ‘Frontier Models’ as defined by those benchmarks would be deemed ‘Frontier Labs’, and be encouraged to adopt best practices, such as publishing model cards with technical details, maintaining strong internal cybersecurity, vetting key personnel, and providing sufficient resourcing for safety and security research, and more.
Initially, Frontier Labs would voluntarily share models with the Standards Body for review up to 30 days before release. Once the assessment protocol is shown to be effective and robust, formalisation could quickly follow, meaning that Frontier Models would be required to pass it to be deployed in the US market. Labs would also work with the Standards Body to address any critical post-release vulnerabilities.
I’m not exactly sure why the SEC would be the best choice to provide oversight to this “AI FINRA,” other than the fact that it has experience in providing regulatory oversight to SROs and that, at least in its current incarnation, it has a strongly pro-innovation stance. Stay tuned.