A fresh proposal from Sen. Ted Cruz, R-Texas, seeks to establish rules on artificial intelligence, particularly in how businesses build and roll out new offerings. The bill would mandate the creation of a federally managed AI testing environment, to which companies would request entry through the White House Office of Science and Technology Policy. Multiple lawmakers, including Cruz, are worried that excessive regulation might cause the U.S. to trail China in AI innovation. The proposed sandbox would allow firms to spotlight burdensome rules and ask for exceptions. Cruz emphasises the sandbox Act will fuel AI innovation in the US Cruz’s sandbox program would temporarily waive federal enforcement and licensing mandates for two years, with renewals allowed for up to ten additional years before the program phases out in 12 years. The bill stands to favor AI-driven companies such as Meta, OpenAI, Amazon, and AI startups alike, giving them more space to innovate without strict government intervention. By prioritizing AI, Cruz is working to codify parts of the Trump administration’s AI Action Plan into law. He noted that the executive order alone isn’t enough to keep the U.S. ahead in AI. Cruz argues that this legislation is essential to driving innovation and maintaining the country’s leadership. He detailed that his new AI framework will simplify AI innovation, removing regulatory hurdles, commenting, “Following this new AI framework can turbocharge economic activity, cut through bureaucratic red tape, and empower American AI developers while protecting human flourishing.” In a framework shared with CNBC, he also listed his five priorities: promoting innovation, establishing national AI guidelines, preventing misuse such as fraud, ensuring free speech, and addressing ethical challenges. However, he argued that a regulatory sandbox is not a license to break the law. Developers and users of AI will still have to follow existing legal standards. He noted that judges already apply consumer protection, contracts, negligence, and copyright laws to AI-related cases. He even remarked, “The SANDBOX Act embodies the correct approach to AI policy, one that harnesses the power of American ingenuity and entrepreneurial freedom and sets us on a course to beating China in the AI race.” Additionally, he hinted that the future rules and uses of AI will mirror the values of whichever country leads its development. Cruz warned that if the U.S. fails to lead, those values could reflect regimes that use AI to control populations. He cited China as a threat, saying its dominance could create a surveillance-heavy world order. Like many in the Trump administration, he also believes that America should and will lead the AI revolution . Cruz’s program is drawing bipartisan support AI firms have been anticipating Cruz’s proposal for months, after he first floated the idea during a congressional hearing. States like Utah and Texas have already rolled out their own regulatory sandboxes to guide AI policy. However, lawmakers came up short in their earlier effort to enact broad AI regulations, as the Senate overwhelmingly, by a 99-1 vote, struck down a provision in Trump’s tax bill meant to deter state-level regulation. The proposal, which had strong industry support and Cruz’s leadership, faltered in the final stretch amid Republican concerns that it catered too much to tech giants. Sandboxes are common globally, with examples in Singapore, Brazil, and France. Cruz is still lining up Democratic sponsors, but the issue is drawing support across party lines. A bipartisan coalition has already put forward a separate sandbox measure for the financial sector. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free .
