By Kenneth Corbin

Financial regulators are warning lawmakers against a provision in the House version of the tax and spending bill under consideration in Congress that would bar states from regulating artificial intelligence technologies for a decade.

The North American Securities Administrators Association, or Nasaa, which is composed of state regulators, sent a letter this week to congressional leaders urging them to exclude the 10-year moratorium on state AI regulation from the legislation.

The House version of the bill, which the lower chamber passed on May 22, included the provision. The Senate is currently working through its own version, and Republican leaders have said they aim to finalize the bill, which would be President Donald Trump's first major legislative victory this term, by July 4.

House Speaker Mike Johnson (R., La.) has said he hopes changes to the bill made by the Senate will be minimal, but the AI provision has already proved controversial.

No less of a Trump supporter than Rep. Marjorie Taylor Greene (R., Ga.) has said that she didn't know the AI language was in the bill when she voted for it, calling it a "violation of state rights" and saying that she won't vote for the bill if it includes the provision when it comes back for a final vote.

"We have no idea what AI will be capable of in the next 10 years and giving it free rein and tying states hands is potentially dangerous," she wrote on X.

State regulators share the concern about federal lawmakers limiting their authority, but they also make a consumer-protection argument in opposing the AI provision, saying the "moratorium would expose Americans to AI-powered scams."

This includes online investment scams, Nasaa President Leslie Van Buskirk writes in the letter to House and Senate leaders. "This would contravene the work Nasaa members and other regulators have done to raise awareness about the threats that AI will or may present to investors and other capital markets participants," she writes.

State and federal regulators have already been sounding warnings about AI-driven financial scams such as creating fictitious characters posing as authorities like financial advisors or, in one case that surfaced on YouTube, the nonexistent CEO of a crypto platform.

Nasaa is also cautioning congressional leaders that the ban on AI regulation would limit their ability to respond to a fast-changing technology and, by extension, hobble effective federal oversight that often draws from the experience of the states.

"[T]he moratorium would make it more difficult for states to adapt to innovations in financial services while also depriving federal policymakers of valuable insights derived from state-level efforts to prevent the misuse of AI-powered technologies," Van Buskirk says.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 12, 2025 12:58 ET (16:58 GMT)

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