Analysis
Attorney General Blanche rejected 'regulation by prosecution' for AI, mirroring the crypto playbook. States are filling the gap with their own laws—and the DOJ is challenging them, too.
Attorney General Todd Blanche has drawn a sharp line around the Department of Justice’s role in artificial intelligence: the DOJ will prosecute crimes that happen to involve AI, but it will not regulate the technology itself. That distinction—between enforcement and oversight—has created a structural gap that is reshaping who answers when autonomous systems cause harm.
The policy was stated plainly in a September interview with Bloomberg News. “I’m not going to do regulation by prosecution and investigate or prosecute AI companies when there’s not a statute that they’re violating,” Blanche said. “If we’re going to charge somebody with violating the laws and take away their liberty and put them in prison, it should be because they violated the law.”
A Bloomberg Law analysis published Oct. 16 by Abhishek Kambli, a former deputy associate attorney general, traces the policy to its origin: a playbook the DOJ first tested on cryptocurrency. In April 2025, the department issued a memorandum declaring it “is not a digital assets regulator” and told prosecutors to stop pursuing cases that effectively imposed regulatory frameworks on the crypto industry. The same logic now governs AI.
The Federal Framework
A December 2025 executive order formalized the approach, establishing an AI Litigation Task Force whose mission is “to sustain and enhance the United States’ global AI dominance through a minimally burdensome national policy framework for AI.” The language is deliberate: the federal government has defined its role as protecting the industry’s competitive position, not constructing an oversight architecture.
The practical effect is that federal enforcement against AI companies remains tethered to statutes written for other purposes. The 40-year-old Computer Fraud and Abuse Act makes it illegal to knowingly access a computer without authorization, and the White House has directed prosecutors to use it against those who employ AI to illegally access systems. But legal experts—including former DOJ officials cited in an Oct. 4 Associated Press report—note that the statute’s “knowingly” and “intentionally” requirements create a high bar when the actor is autonomous. FBI Director Kash Patel acknowledged at a recent hearing that the bureau would limit scrutiny to models created with the intent to commit a crime.
States Fill the Gap
With federal hands off, states have moved to write their own rules. California’s Transparency in Frontier AI Act, effective this year, requires large frontier-model developers to publish information about training data, safety frameworks, and risk assessments, with penalties reaching $1 million per violation. New York, Illinois, and Connecticut have enacted similar statutes. Illinois mandates annual independent third-party audits of safety practices. Connecticut requires bias testing and pre-use notices when AI tools are used in employment decisions.
State attorneys general are also testing existing law against AI companies. Pennsylvania’s AG initiated an enforcement action against a chatbot that falsely represented itself as a licensed psychiatrist. Florida’s AG opened a criminal investigation into OpenAI’s ChatGPT after the chatbot allegedly offered advice to a gunman.
The DOJ Challenges the Substitutes
The federal government is not merely stepping aside—it is actively contesting the state-level rules that fill the void. The DOJ intervened in xAI’s challenge to Colorado’s Algorithmic Discrimination law, arguing that the state statute violates the Equal Protection Clause by forcing regulated entities to alter their AI outputs based on demographics to avoid disparate-impact risk. If that argument succeeds, it could narrow the field of state laws the federal government is simultaneously declining to replace.
The tension mirrors a pattern our prior Policy Radar coverage identified: agent liability is being written in rulemaking dockets, court filings, and private product terms rather than in federal statute. The Warner AI AGENT Act and the Hawley-Murphy AI Agent Accountability Act both remain in early legislative stages with no committee markup. Meanwhile, the FTC is pursuing a separate enforcement track through Civil Investigative Demands to OpenAI and Anthropic, shifting from marketing claims to structural safety discovery.
What the Gap Means
The combined effect is a fragmented accountability landscape. The DOJ will not regulate AI through enforcement. The FTC is investigating but has not issued rules. Congress has not passed a statute. And the state laws that attempt to fill the gap face federal legal challenges.
For the companies building autonomous agents that shop, book, and communicate on behalf of users, the question of who answers when something goes wrong remains unresolved at the federal level. The states are writing answers, but those answers are uneven, under legal challenge, and structurally disconnected from any national framework. Blanche’s policy draws a clean line—but the line falls exactly where the hardest questions begin.
Priya Nair works for Forkast.
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