# The proposed policy exempts open models from federal review

Markdown copy of https://realalpha.app/s/the-proposed-policy-exempts-open-models-from-federal-review/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Matan Grinberg](https://realalpha.app/builders/matan-grinberg/) · Matan Grinberg is cofounder of Factory.
- Host: [Sabrina Halper](https://realalpha.app/people/sabrina-halper/) · Host, Sabrina Halper Show · Has worked as an investor at HOF Capital and founded SHS Media.
- Show: Sabrina Halper Show
- Episode: [Factory’s Matan Grinberg on Recursive Self-Improvement, Chinese Models & Lessons From String Theory](https://realalpha.app/v/-QQkpdS-Qjo/), Sep 2, 2026
- Moment: 35:19 to 39:00 of the episode (4 min), playing on https://realalpha.app/s/the-proposed-policy-exempts-open-models-from-federal-review/; the episode from there: https://realalpha.app/v/-QQkpdS-Qjo/?t=2119

## Takeaways

1. Closed US models would be subject to review under the policy.
2. Open-model makers would be exempt from that review.
3. He says US firms face limits on distilling other models.

## About this segment

Matan Grinberg backs a policy that would review US closed models but exempt open ones. He says US open-model makers also face a disadvantage on distillation.

From “Factory’s Matan Grinberg on Recursive Self-Improvement, Chinese Models & Lessons From String Theory”, Sep 2, 2026. [Watch the full episode](https://realalpha.app/v/-QQkpdS-Qjo/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[35:31](https://realalpha.app/v/-QQkpdS-Qjo/?t=2131) to the policy side um so a lot of these uh you know a lot of big token has been trying to uh you know push for regulatory capture to make it such that any new entrance whether it's big token nerd snipe i'm gonna have a whole bad thing in matan's definitions i love um but you know they're trying to pursue regulatory capture such that there can be no uh you know or make it very difficult for any new model providers to emerge and end.

[36:00](https://realalpha.app/v/-QQkpdS-Qjo/?t=2160) And the White House had a stroke of genius with the policy that they just came out with. Huge shout out to Dr. Michael Kratsios, CTO of the United States. This was like, genius. So basically, they were trying to make it such that there's this like regulatory body. So if you want to put out a model that's, you know, any relevant size, this regulatory body has to go and review it. And, you know, it might take forever. And you probably need to know people and just all this stuff to slow down innovation.

[36:29](https://realalpha.app/v/-QQkpdS-Qjo/?t=2189) and what the administration came out with is basically if you are producing closed models great open anthropic and all you guys you want to be regulated if you're producing closed models in the united states you are going to be subject to this regulation if you are making open models in the united states you will not be subject to this regulation so it's basically close your weights at your own risk if you're going to be closed we will regulate you if you're going to be open run free which i think is fantastic because now the thing that we need is u.s open models to be fantastic the thing that they were trying to regulatory capture away was good u.s open models and so this was i think like just such a good like threading of the needle to make it such that you know closed models are not necessarily disincentivized but like now you have the

[37:11](https://realalpha.app/v/-QQkpdS-Qjo/?t=2231) burden of regulation open models you know can can run free and do you see a world where u.s open models get really good yes can you see that right yes the incentives are already kind of becoming clear i actually think we don't even need any like intervention necessarily to improve that the one thing i think that is proving difficult is model distillation right now all the all the non-us models are distilling the best models from the united states and the united states wants the government to step in to avoid this but really this is on the model providers like you need to do kyc and if you don't like what they're using with your models you need to cut them off they're not going to do this because this juices their revenue numbers and so they want to keep that so they're going to keep allowing people to distill um but you know it's technically against the terms

[37:56](https://realalpha.app/v/-QQkpdS-Qjo/?t=2276) of service but you can't pursue you know a chinese model provider for violating your terms of service that's just not going to happen the tricky thing is that u.s open models cannot distill because if they do they will be prosecuted in the united states and they are going to be you know subject to uh to those laws into the terms of service there that's the one thing that i think is difficult is if we somehow um made it such that it wasn't as much of a blocker for the u.s open models to distill then i think it would be very easy for us to catch up otherwise we're just going to need good economic incentive for investors to invest in open model companies which they need to see there's revenue at the end of the day that'll come from it which they're already like government is going to buy u.s open models so there's revenue at the end of the day which means vcs will put

[38:41](https://realalpha.app/v/-QQkpdS-Qjo/?t=2321) money in which means you can get good researchers which means you can you know build these good models so we just touched there but i just want to go one level deeper on cyber security um