The law, 8 C.F.R. § 301(g), is a naturalization law that designates a class of persons citizens at birth. Cruz is a member of this class.
Naturalization statute may assign citizenship at any point. It may be at birth; or upon the naturalization of the parent(s); or, for those after 18 years of age, upon completion of a process.
For example:
8 C.F.R. § 301-309 “Nationality at Birth and by Collective Naturalization” collectively naturalizes classes of persons and assigns citizenship at birth.
8 C.F.R. § 310-348 “Nationality Through Naturalization” defines classes of persons who are eligible and a process by which eligible individuals naturalize.
From Black’s Law Dictionary: “Collective naturalization takes place where a government, by treaty or cession, acquires the whole or part of the territory of a foreign nation and takes to itself the inhabitants thereof, clothing them with the rights of citizenship either by the terms of the treaty or by subsequent legislation.”