Treasury Signals Major Shift in AI Regulation

The US Treasury Department launched its AI Innovation Series this week, marking a fundamental shift from constraining AI adoption to actively promoting it within the financial sector. The initiative, led by the Office of the Financial Stability Oversight Council (FSOC) and Treasury’s Artificial Intelligence Transformation Office (AITO), aims to strengthen financial system resilience through AI integration.

Treasury Secretary Scott Bessent emphasized that “leadership in AI adoption is a crucial component of economic security,” signaling the administration’s move “from a posture focused on constraint toward one that recognizes failure to adopt productivity-enhancing technology as its own risk.”

Industry Revenue Consolidation

Meanwhile, the AI industry continues its rapid consolidation around major players. OpenAI has surpassed $25 billion in annualized revenue and is reportedly preparing for a potential public listing as early as late 2026. Rival Anthropic is approaching $19 billion in annualized revenue, highlighting the massive scale these companies have achieved.

However, not all developments are positive. OpenAI announced plans to discontinue Sora, its video generation tool, despite significant industry attention and a partnership with Disney. The company has also unveiled new safety prompts specifically designed for teenage users, reflecting ongoing concerns about AI safety.

Practical Implications for European Builders

For Irish and European AI developers, these developments signal several key trends. The US Treasury’s embrace of AI adoption in financial services could pressure European regulators to balance the EU AI Act’s safety focus with competitive concerns. Meanwhile, the revenue concentration among US companies highlights the challenge European startups face in scaling.

Morgan Stanley’s warning of an “AI breakthrough” in H1 2026 suggests European companies should prepare for another wave of capability improvements, particularly in agent-based workflows that are becoming the new development focus.

Open Questions

Key uncertainties remain around how European financial regulators will respond to the US Treasury’s pro-adoption stance, whether OpenAI’s IPO timeline will accelerate competitive pressures, and how smaller European AI companies can compete with the massive revenue advantages of US incumbents. The discontinuation of Sora also raises questions about the commercial viability of AI video generation tools.

Source: Treasury Department