US Commerce Drafts AI Chip Rule to Close Loophole Left by Scrapping Biden-Era Know-Your-Customer

The US Commerce Department is drafting a new rule on AI chips, aiming to close a regulatory loophole left by its earlier decision to rescind the Biden administration's "Know-Your-Customer" (KYC) requirement, according to Tech Times.

The report says the draft rule targets the AI chip space, where the removal of the KYC customer-verification requirement is seen as having opened a gap in enforcement; the new rule seeks to tighten requirements again around transactions and exports.

The move continues a broader pattern of US policy on AI chip controls: alongside restrictions on high-end computing exports, the government is adding compliance requirements across supply chains and transaction flows.

For chip makers, cloud providers and buyers, the return of KYC-style requirements could push up the cost of customer due diligence and transaction review, and the compliance path for cross-border AI chip purchases will need to be reassessed.

Details of the draft rule — its specific provisions, scope and enforcement mechanics — have not been disclosed yet, so the formal text and the industry feedback process will be key things to watch.

The market will be watching when the Commerce Department publishes the rule text, how it connects with the existing export-control framework, and what it means for the flow of AI chips globally.