2025 Year‑in‑Review And 2026 Look-Ahead: Financial Regulatory Developments, What Has Changed Since Publication, And What's To Come

Key Financial Regulatory Developments

2025 brought one of the most dynamic financial regulatory environments since the immediate aftermath of Dodd‑Frank, marked by shifting agency priorities, rapid litigation developments, and evolving supervisory philosophies.

This Year‑in‑Review consolidates our 2025 coverage and highlights material developments that occurred after publication, along with areas where regulators have signaled likely focus for 2026.

Topics addressed include:

• BSA/AML and sanctions, including efforts to reduce regulatory burden and modernize reporting requirements
• Federal preemption, with the most significant developments under the National Bank Act and potential changes in framework also discussed under securities law
• Capital reform, including leverage ratios, stress testing, and Basel III implementation
• Supervision and tailoring, with a focus on material financial risk and lessening requirements on community banks
• Recovery and resolution planning, including planned rollbacks of requirements enhanced after the 2023 regional bank failures
• Debanking, including an August 2025 executive order, targeted exams of the largest institutions, and elimination of examiner consideration of reputational risk
• Crypto and digital assets, including federal legislation establishing a stablecoin architecture
• Artificial intelligence, including a December 2025 executive order to establish a national policy framework and continuing state regulatory efforts

Each section follows a consistent structure—why the issue mattered in 2025, what we covered, what has changed since, and what may be ahead in 2026—and may be read independently.

I. Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) and Sanctions

Why 2025 mattered. The Financial Crimes Enforcement Network (FinCEN) and the federal banking agencies began efforts to reduce the regulatory burden of BSA/AML requirements. Congress also proposed legislation to modernize the BSA by increasing the thresholds for filing Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).

What we covered.

• Corporate Transparency Act (CTA): From Injunctions to Interim Relief (Dec. 2024-Mar. 2025). Beginning in late 2024, we tracked the compliance whiplash produced by a series of court decisions lifting and then reinstating the CTA's beneficial ownership reporting requirements. Our blog coverage concluded in March 2025 by examining the FinCEN Interim Rule that exempted domestic entities from CTA reporting and narrowed obligations for foreign reporting companies.
• FinCEN Proposal for Two-Year Delay of Effectiveness of Investment Adviser AML Rule (Sept. 2025). We detailed FinCEN's proposal to shift the effective date for certain investment advisers' BSA obligations from Jan. 1, 2026 to Jan. 1, 2028, citing the need to reassess burden and fit. FinCEN finalized the rule at the close of the year.

What has changed since.

• Lessening of Customer Identification Program (CIP) Requirements (June-Aug. 2025). In June 2025, FinCEN issued an order in coordination with the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) permitting their supervised institutions to obtain Taxpayer Identification Number (TIN) information from a third party rather than the customer itself, provided they are otherwise in compliance with the CIP Rule. The Board of Governors of the Federal Reserve System (FRB) issued a similar order in July. The FDIC then updated its supervisory approach in August to allow use of pre-populated customer information from other bank or affiliate accounts or relationships under certain circumstances.
• SAR Filing and Review Relief (Oct. 2025). FinCEN, the OCC, the FRB, the FDIC, and the NCUA issued answers to SAR-related frequently asked questions (FAQs). The FAQs clarified expectations for requirements to file a SAR in cases where a transaction has been structured to evade CTR reporting requirements. They also stated that continuing activity reviews on customers or accounts for which a SAR was previously filed and documentation of decisions not to file a SAR are not required. Instead, a financial institution can rely on risk-based, reasonably designed internal policies, procedures, and controls to identify and report continued activity.
• Proposed Legislation to Lower SAR and CTR Thresholds (Oct. 2025). Proposed legislation was introduced in the Senate to increase the CTR threshold from $10,000 to $30,000 and the SAR thresholds from $2,000 or $5,000, as applicable, to $3,000 or $10,000. The bill also requires the Department of the Treasury (Treasury) to adjust the amounts for inflation every five years.

What's next for 2026. Treasury Secretary Scott Bessent has previewed FinCEN and the federal banking agencies are working on a proposed rule setting out requirements for an effective BSA/AML program which will give FinCEN primary responsibility for enforcement. Comptroller Gould has further indicated the OCC will be focused on reforms to BSA/AML compliance more broadly in 2026, following development of targeted BSA/AML exam procedures for community banks in 2025. These reforms collectively are expected to focus on the overall effectiveness of BSA/AML compliance programs, rather than pursuing technical violations. In the Sanctions space, a divergence could develop between the jurisdictions that are subject to U.S. and the European Union/United Kingdom comprehensive sanctions, leading to a more fragmented and complex sanctions compliance regime.

II. Preemption

Why 2025 mattered. During late‑2024 and 2025, lower courts delivered the first decisions seeking to apply National Bank Act (NBA) preemption principles under the Supreme Court's decision in Cantero, revealing continued divergence in how courts weigh the "significant interference" standard notwithstanding the Cantero Court's efforts to provide greater clarity. On the securities side, comments from then Acting SEC Chairman Uyeda highlighted potential areas for reconsideration of the scope of federal preemption under the National Securities Markets Improvement Act of 1996 (NSMIA).

What we covered.

• Illinois Interchange Fee Prohibition Act (IFPA) Preempted (January 2025). We summarized the district court's preliminary injunction against enforcing the IFPA as to national banks and federal savings associations.
• Ninth and Second Circuit Courts of Appeal Evaluate NBA Preemption of State Interest-on-Escrow (IOE) Laws under Cantero (October 2025). We flagged developments in how these two Circuit Courts have responded to Cantero and upheld, albeit for different reasons, state IOE laws against NBA preemption claims.
• Uyeda's April 2025 Remarks (April 2025). We reviewed comments made by then Acting SEC Chairman Uyeda discussing potential reconsideration of the scope of federal preemption of state law under NSMIA, highlighting the need to revisit the assets under management size threshold that triggers registration with the SEC and to reconsider and rationalize requirements for transaction‑level state qualification filings.

What has changed since.

• OCC Proposals on Preemption of IOE Laws (Dec. 2025). Shortly before the close of 2025, the OCC issued two proposals to re-enforce its long-standing position that IOE laws are preempted. First, the OCC utilized its rulemaking authority under the NBA to specifically authorize national banks to establish or maintain real estate escrow accounts and to provide the banks with flexibility in setting the terms and conditions of, including compensation and fee decisions in connection with, their use. In addition, the OCC also exercised its authority under Dodd-Frank to issue a preemption determination that state IOE laws are preempted by the NBA.

What's next for 2026. The OCC's issuance of its escrow account related proposals follows through on statements made by OCC leadership throughout 2025 that the OCC would vigorously defend NBA preemption principles. Other preemption determinations from the OCC may follow. In addition, the decisions of the Ninth and Second Circuit Courts on state IOE law preemption and the still pending decision of the Second Circuit in reconsidering New York's IOE law set up the potential for another split among the Circuits and for NBA preemption potentially to once again be back on the Supreme Court's docket.

III. Capital Reform

Why 2025 mattered. The banking agencies resumed efforts at capital reform beginning with the largest and then the smallest institutions—the enhanced supplementary leverage ratio (eSLR) applicable to U.S. Global Systemically Important Banks (GSIBs) and the community bank leverage ratio (CBLR) that is an alternative to risk-based capital ratios for qualifying community banks with less than $10 billion in total consolidated assets. They also issued two notices of proposed rulemaking related to stress testing.

What we covered.

• Proposed Rule to Modify eSLR (June 2025). In our Law360 article, we explained the policy considerations behind and proposed changes to the eSLR for GSIBs and their insured depository institution (IDI) subsidiaries, as well as corresponding changes to GSIB leverage-based total loss-absorbing capacity and external long-term debt requirements. The article also highlighted a related stress testing proposed rule from the FRB that would average stress test results over two consecutive years to reduce volatility in the stress capital buffer calculated from the results.
• Federal Reserve Capital Conference (July 2025). We recapped the FRB's conference that brought together regulators, practitioners, banking executives, and academics to discuss topics including leverage ratios, stress testing, the GSIB surcharge, and U.S. implementation of Basel III capital reforms.
• CBLR proposed rule (Nov. 2025). We discussed the joint OCC, FDIC, and FRB proposal to lower the CBLR from its current level of 9% to the statutory minimum of 8% and to extend the grace period during which a community bank can continue to use the CBLR, while it attempts to regain compliance, from two quarters to four quarters.

What has changed since.

• Additional Stress Testing Proposed Rule (Oct. 2025). The FRB released a notice of proposed rulemaking to enhance the transparency and accountability of its supervisory stress test models and a request for comment on its proposed 2026 supervisory stress test scenarios. The proposed changes followed litigation by industry trade groups and would (i) allow banks more time to prepare and plan for the tests by shifting the jump-off date of the stress tests from December 31 to September 30 and (ii) modify Y-14A/Q/M reporting forms to reduce the required documentation, according to FRB estimates, by over 10,000 pages per firm.
• Final eSLR rule (Nov. 2025). The agencies finalized the eSLR rule largely without change from their proposal, other than adding a 1% cap on the eSLR applicable to GSIBs' IDI subsidiaries. The OCC also did not implement a proposed change to replace the asset size applicability thresholds in its eSLR rule with a reference to national banks and federal savings associations that are GSIB subsidiaries.

What's next for 2026. More extensive capital reforms are expected in 2026. The agencies have previewed that they intend to issue a revised rule to implement the Basel III reforms by early 2026 and to tackle other areas including the surcharge applicable to GSIBs.

IV. Supervision and Tailoring

Why 2025 mattered. The banking agencies set forth a new supervision approach focused on material financial risks over policy, procedure, and governance matters. Focus was broadly on lessening regulatory burden for all institutions. Particular emphasis was placed on community banks, which were the subject of specific guidance, exam procedures, and a proposed rule from the OCC.

What we covered.

• OCC Community Bank Relief (Oct.-Dec. 2025). We discussed three bulletins and a proposed rule released in October aimed at institutions with up to $30 billion in assets, and three additional bulletins in November and December. These addressed exam activities for community banks generally and covered retail nondeposit investment products and the BSA/AML specifically; OCC expectations for a community bank's model risk management practices; proposed expansion of certain expedited and streamlined filing procedures; and proposed guidance to make use of the strategic plan alternative to OCC examination of Community Reinvestment Act performance more accessible.
• Lookback on a Year of Community Bank Reform (Oct. 2025). In our IFLR article, we highlighted ongoing banking agency and Congressional reform efforts. We covered efforts to tailor regulation to risk and complexity, simplify capital requirements, expand funding options through broader use of reciprocal and custodial deposits and increased FDIC insurance limits, and promote competitiveness and growth.
• Discussion of Changing Agency Priorities at The Clearing House Conference (Nov. 2025). Our broad-ranging article on the conference covered statements from Comptroller Gould and other OCC and FRB representatives on agency priorities including supervision-related matters.

What has changed since.

• FRB Changes to Large Financial Institution Rating System (Nov. 2025). The FRB finalized updates to its frameworks to (i) allow firms with no more than one Deficient-1 component rating and at least two component ratings of Conditionally Meets Expectations or Broadly Meets Expectations to qualify as "well managed" and (ii) remove the presumption that firms with one or more Deficient-1 component ratings will be subject to a formal or informal enforcement action and make the enforcement decision discretionary. 
• OCC/FDIC Rescission of Interagency Leveraged Lending Guidance (Dec. 2025). The OCC and FDIC rescinded 2013 interagency guidance and related 2014 FAQs, attributing a shift in leveraged lending to outside the regulatory perimeter to the rigidity of that guidance. The OCC and FDIC indicated banks should follow general risk management and safe and sound lending principles when engaging in leveraged lending.
• OCC Proposed Increase of Threshold for Applying Heightened Standards (Dec. 2025). The OCC proposed increasing the threshold at which its guidelines establishing heightened standards apply from $50 billion to $700 billion — bringing the number of covered banks to 8 from the current 38. The OCC could still apply the heightened standards to other banks with highly complex operations or that otherwise present heightened risk. The OCC put several questions out for comment, including whether to rescind the guidelines entirely or retain certain parts of them for banks meeting specific asset thresholds under $700 billion.
• FRB Statement of Supervisory Operating Principles and Release of Staff Manual (Nov.-Dec. 2025). In November, the FRB released a Statement of Supervisory Operating Principles directing examiners and supervisory staff to focus on material financial risks instead of processes, procedures, and documentation and to appropriately reflect financial condition and materials risks in supervisory ratings. This followed an October 2025 proposed rule by the OCC and the FDIC to define "unsafe or unsound practice" to focus on material financial risks and to limit issuance of matters requiring attention (MRAs) to situations involving material financial harm to the institution, material risk of loss to the Deposit Insurance Fund, or a violation of a banking or banking-related law or regulation. The FRB statement further indicated examiners and supervisory staff should document shortcomings not meriting an MRA or matter requiring immediate attention (MRIA) with nonbinding supervisory observations and rely on internal audit validation of remediation of an MRA or MRIA unless an institution's audit function is rated unsatisfactory. In December, the FRB published the operating manual for its program supervising the GSIBs.

What's next for 2026. The push to tailor regulation based on size, complexity, and risk will continue as the agencies finalize rules proposed in 2025. Vice Chair for Supervision Michelle Bowman recently previewed potential upcoming reforms from the FRB, including to define "unsafe and unsound" activities, similar to what already has been proposed by the OCC and FDIC; update and index asset thresholds; align the CAMELS rating system to risk profile and financial condition and implement measurable factors for the management or "M" rating; and reexamine call reports and other data collection efforts. The FRB has stated it intends to release other large bank supervision staff manuals, including covering capital and liquidity planning, the large bank rating program, and enforcement actions. Comptroller Gould indicated community banks and reform to liquidity risk management will be priorities of the OCC in 2026.

At the recent ABA Banking Law Committee annual meeting in Washington, DC, representatives from all three agencies highlighted the need to update exam manuals and procedures, train examiner staff, and build a library of concrete examples to operationalize the shift to focusing supervision on material financial risk. There was recognition that this could be a multi-year effort, and institutions will not see an immediate change in their interactions with examiners.

V. Recovery and Resolution Planning

Why 2025 mattered. The FDIC and OCC rolled back enhancements to covered insured depository institution (CIDI) resolution planning and large national bank recovery planning requirements that were finalized in 2024. The FDIC took a different perspective on the challenges with the 2023 regional bank failures, indicating the preferred resolution strategy should be a resolution weekend sale to avoid losses associated with operating a bridge bank and selling off pieces of the bank. The FDIC also began exploring nonbank participation in the failed bank bidding process, such as by private equity.

What we covered.

• FDIC CIDI Resolution Planning Frequently Asked Questions (Apr. 2025). In our Law360 article, we covered changes by the FDIC to required content of resolution plans (for "Group A CIDIs" with $100 billion or more in total assets) and informational filings (for "Group B CIDIs" with between $50 billion and $100 billion in total assets), credibility criteria, and capabilities testing, in advance of initial July 2025 submissions. 
• FDIC Chairman Hill Speech and OCC Proposed Rule to Rescind Recovery Planning Requirements (Oct.-Nov. 2025). We highlighted takeaways from an October speech from then Acting FDIC Chairman Hill previewing further rolling back of resolution planning requirements and efforts to broaden participation in the failed bank bidding process. We also discussed the OCC's proposal to rescind recovery planning requirements on national banks with $100 billion or more in assets due to perceptions these plans are overly burdensome and duplicative of other efforts.

What has changed since.

• FDIC Update on CIDI Resolution Planning (Dec. 2025). The FDIC reiterated in a financial institution letter that it intends to propose changes to the CIDI rule in 2026. Given the upcoming proposal, GSIB subsidiaries that are due to make full resolution submissions by July 1, 2026 will only have to submit the content required in an interim supplement. The remaining Group A CIDIs due to file by July 1, 2026 will have to submit a full plan, subject to the April 2025 FAQs and content requirement waivers. Group B CIDIs due to file by April 1, 2026 or July 1, 2026 will also have to make their currently scheduled submissions, but Group B CIDIs in the October 1, 2026 cohort will not have to submit until the FDIC issues a final rule. The FDIC indicated 2026 capabilities testing will focus on virtual data room capabilities.

What's next for 2026. The FDIC is expected to release its proposed rule to modify the CIDI resolution planning requirements, and the OCC proposed rule to rescind its recovery planning guidelines will likely become final. If the FDIC and FRB release public feedback on large bank holding companies' 2025 resolution plans under Section 165(d) of the Dodd-Frank Act, that feedback may reveal to what extent the agencies intend to more broadly roll back resolution planning requirements. Debate will likely continue within the agencies over the usefulness of recovery and resolution plans and the amount and frequency of information that should be required. Comptroller Gould, who is a voting member of the FDIC Board of Directors, delivered a speech at the ABA Banking Law Committee meeting that questioned the statutory authority for CIDI resolution plans. He also advocated shifting 165(d) plan submissions to a less frequent (e.g., every five or ten years) cadence and either rescinding the FRB and FDIC 165(d) resolution planning guidance or putting it out for public comment as a proposed rule.

VI. Debanking

Why 2025 mattered. The change in administration at the beginning of 2025 resulted in Presidential and federal agency action to address ongoing criticism by some industry groups that banks and regulators had "politicized" banking, resulting in the denial or termination of services for some lawful, but viewed by some as politically disfavored, businesses.

What we covered.

• Executive Order Raises Spotlight on Debanking (Aug. 2025). In our Westlaw article, we discussed the Executive Order directing federal agencies to review and identify instances where financial institutions had unlawfully denied, modified or terminated services based on a customer's (or potential customer's) political, religious, or social beliefs or conducting a lawful business that was disfavored by the institution. The Executive Order also required agencies to remove concepts of "reputation risk" from examination manuals and to evaluate whether its regulations in other areas had contributed to unlawful debanking practices. We also discussed how the Executive Order followed on the heels of state legislation, both enacted and proposed, in many states to ban unlawful debanking practices. We highlighted initial efforts by the federal agencies to implement the Executive Order, including information requests by the OCC to the largest banks and OCC bulletins indicating it would consider debanking practices, policies, and procedures in evaluating license applications and CRA performance.

What has changed since.

• OCC and FDIC Proposal to Prohibit Reputation Risk Consideration (Oct. 2025). Following the removal of reputation risk from exam manuals, the OCC and FDIC proposed a rule that would define "reputation risk," prohibit adverse agency action against an institution based on reputation risk, and prohibit the agencies from instructing an institution to refrain from, terminate, or modify the terms of business with a third party based on reputation risk or factors perceived as creating reputation risk such as involvement in politically disfavored, lawful activities.

• Targeted Exams (Sept.-Dec. 2025). As directed by the Executive Order, federal agencies announced the initiation of examinations, largely targeted at the largest institutions, to evaluate any unlawful debanking practices. In December, the OCC released preliminary findings from its large bank reviews, highlighting the OCC's observation that between 2020 and 2023 the banks maintained public and nonpublic policies restricting access to banking services for industries related to oil and gas, coal-mining, firearms, private prisons, payday lending, tobacco, adult entertainment, political action committees, and digital assets.

What's next for 2026? The banking agencies will continue efforts to remove "reputational risk" considerations from examination practices, through finalization of the OCC and FDIC proposed rule and similar efforts by the FRB that have been previewed by Vice Chair for Supervision Bowman. The OCC has indicated that it is continuing to evaluate the extent to which debanking practices highlighted in the OCC's December report impacted affected industries. At the ABA Banking Law Committee meeting, Elizabeth Ratliff, OCC Director for Enforcement, indicated the OCC has not yet determined which accountability measures it will be taking, and the industry should continue paying attention to this space as there will be more to come. Early February will bring deadlines for other actions required under the Executive Order, including review by the banking agencies of supervisory and complaint data to identify any unlawful debanking based on religion and referral to the Attorney General for civil action, as appropriate.

VII. Crypto and Digital Assets: Federal Stablecoin Architecture

Why 2025 mattered. Enactment of federal legislation for payment stablecoins provided a comprehensive regulatory framework similar to the dual banking system that would bring all U.S. stablecoin activity under the supervisory authority of state and federal regulators. The banking agencies withdrew guidance under the prior Administration that was more restrictive of regulated institutions' digital asset-related activities. The OCC saw an uptick in requests for national trust bank charters from digital assets related businesses seeking to engage in digital asset custody, settlement, clearing, and other services and stablecoin issuance as regulated institutions. The OCC also proposed a rule to clarify inclusion of non-fiduciary activities within a national trust bank charter. The efforts by the banking agencies were in addition to efforts by the SEC and CFTC, including an announcement by then Acting CFTC Chair Caroline Pham in December that listed spot cryptocurrency products would begin trading for the first time in U.S. federally regulated markets on CFTC registered futures exchanges.

What we covered.

• The GENIUS Act (July 2025). We outlined the GENIUS Act's approach to issuer oversight, permissible and non-permissible activities, reserve and custody requirements, redemption rights, regulatory supervision, anti-money laundering and sanctions compliance, and what implementation could mean for banks, trust companies, and fintech firms.

What has changed since.

• FDIC Approves Notice of Proposed Rulemaking (Dec. 2025). The FDIC Board of Directors approved a proposal to establish GENIUS Act license application procedures for FDIC-insured institutions seeking to issue payment stablecoins and engage in certain related activities through subsidiaries. This followed a September 2025 Advance Notice of Proposed Rulemaking from Treasury seeking public comment on the regulations it will issue under the GENIUS Act, which included questions around potential safe harbors, reserve requirements, the balance between state and federal regulation, and AML and sanctions requirements.
• FRB Payment Account Proposal and Policy Statement Focused on Responsible Innovation (Dec. 2025). The FRB sought public comment on a proposed payment account—also called a "skinny" master account—which would allow its holder to maintain limited overnight balances to provide liquidity for payments at the beginning of the next business day and would not pay interest on those overnight balances or grant access to the discount window or Reserve Bank intraday credit. The FRB also withdrew a 2023 policy statement interpreting section 9(13) of the Federal Reserve Act and setting out supervisory expectations related to "novel and unprecedented activities," as well as an associated Supplementary Information discussing crypto activities, and replaced it with a new policy statement designed to facilitate innovation by state member banks consistent with safety and soundness and U.S. financial system stability.
• OCC Conditional National Trust Bank Charter Approvals and Proposed Rule (Dec. 2025-Jan. 2026). The OCC conditionally approved five national trust bank charter applications—two de novo charter applications, and three applications to convert a state trust company to a national trust bank. The OCC proposed a rule to amend its chartering regulation to replace the reference to "fiduciary activities" in reference to a special purpose bank to "the operations of a trust company and activities related thereto," to make clear a trust bank charter includes non-fiduciary activities.

What's next for 2026. On the legislative front, discussion is focused on passing a comprehensive market structure law in early 2026 before Congressional attention turns to the upcoming midterm elections. The House passed the Digital Asset Market Clarity Act of 2025 (the Clarity Act), which allocates oversight responsibility between the CFTC and SEC and creates registration and compliance requirements for intermediaries like brokerages and exchanges, including requirements under the BSA. The Clarity Act is now moving through review by the Senate Banking and Agriculture Committees. As of publication, the Agriculture Committee has scheduled a markup for January 27, while the Banking Committee markup previously scheduled for January 15 has been postponed indefinitely. The main point of contention is the extent to which the Clarity Act will address stablecoin issuers or affiliates offering rewards to customers. Some in the banking industry have noted this is a potential loophole to the GENIUS Act's prohibition on stablecoin issuers paying interest or yield to holders. The banking agencies and Treasury will also continue or initiate rulemaking processes implementing the GENIUS Act. Market participants, encouraged by the federal sanction of certain digital asset activity, are expected to explore potential use cases that might drive adoption of digital assets.

VIII. Artificial Intelligence

Why 2025 mattered. The year was marked by efforts at the federal level to promote a national policy framework for artificial intelligence (AI) and restrain state efforts to regulate the technology, which the Trump Administration has largely viewed as an impediment to innovation. States continued to enact their own laws, even as the Administration issued an Executive Order seeking to restrain these types of laws.

What we covered.

• Texas Responsible Artificial Intelligence Governance Act (Effective Jan. 2026). We explained that the Texas statute represented a unique approach to AI regulation, drawing some of its themes from other comprehensive AI legislative frameworks in the European Union and Colorado, while also incorporating Texas‑specific policy priorities.
• White House Executive Order on National AI Policy Framework (Dec. 2025). We summarized the Executive Order's aim to establish a uniform national policy by challenging state AI laws that, in the Trump Administration's view, unconstitutionally regulate interstate commerce, are preempted by existing federal regulations, or are otherwise unlawful. We noted, however, that it remains unclear whether this new directive represents a significant litigation risk for states.

What has changed since then.

• New York State Enacts RAISE Act (Dec. 2025). New York State enacted the Responsible AI Safety and Education (RAISE) Act, weeks after the Executive Order. The RAISE Act establishes new transparency and safety requirements for developers of powerful frontier AI models, mandating that they publish safety protocols and report any critical harm incidents to state authorities within 72 hours. It also creates an oversight office within the state's Department of Financial Services to assess developers and issue annual reports. The RAISE Act is similar to the Transparency in Frontier Artificial Intelligence Act (TFAIA) passed by California in September 2025, which is also targeted toward frontier AI model developers and became effective on January 1.

What's next for 2026. Despite the efforts to establish a uniform national standard for AI regulation and constrain potentially inconsistent state action, it is not clear what effect, if any, these efforts will have. This is particularly true of the efforts to wield federal preemption as a tool to slow the pace of state activity in the space because Congress has yet to promulgate a national framework for AI regulation. Absent an applicable federal preemption standard adopted by Congress, states have traditionally retained the power to regulate unfair and deceptive activities in or affecting their jurisdiction.