The landscape of financial regulation is shifting dramatically. The Consumer Financial Protection Bureau (CFPB), once aggressive in tackling hidden fees and discriminatory practices, has effectively hit pause on many of its activities. The Securities and Exchange Commission (SEC) is scaling back investigations and easing its approach to cryptocurrency enforcement. Meanwhile, the Commodity Futures Trading Commission (CFTC) is consolidating enforcement operations and eliminating task forces, signaling a shift away from "regulation by enforcement."
These moves—some officially announced, others widely reported—suggest a systematic dismantling or at least a significant rollback of financial oversight. Under the current administration, enforcement actions and new rule-making efforts will likely decline across regulatory agencies.
To underscore this shift, President Trump recently signed an executive order requiring agencies to identify and repeal at least ten existing rules for every new rule proposed. The White House describes this as a "massive 10-to-1 deregulation initiative," aimed at reversing the "regulatory blitz" of the previous administration.
Business groups have long complained that agencies, particularly the SEC, were overwhelming firms with rapid regulatory changes, making compliance a costly and challenging burden. This deregulatory shift is seen as a relief for financial firms struggling to keep pace with evolving rules. However, critics argue that reducing oversight sends a dangerous message—one that suggests regulators are stepping back, leaving markets more vulnerable to misconduct.
The change in leadership at the CFPB is a prime example of this shift. Acting Director Scott Bessent, who took over after the departure of Rohit Chopra, is reportedly halting much of the agency’s work. This has drawn strong criticism from figures like Senator Elizabeth Warren, who warns that the new approach effectively signals to corporations and big banks that they have free rein to exploit consumers.
Meanwhile, financial regulators are facing potential scrutiny from the administration’s broader efforts to reduce government size. Elon Musk, leading the Department of Government Efficiency (DOGE), has proposed eliminating the CFPB altogether, arguing that multiple regulatory agencies create unnecessary duplication. House Democrats have pushed back, defending the CFPB as the only federal agency solely focused on protecting consumers in the financial marketplace. They highlight the agency’s role in returning over $21 billion to consumers harmed by deceptive financial practices.
At the SEC, the changes have been more subtle but equally significant. The commission remains two members short of a full panel, but acting Chairman Mark Uyeda has appointed Republican Commissioner Hester Peirce to lead a task force on cryptocurrency regulation. This is a welcome shift for the crypto industry, which previously clashed with the SEC’s aggressive enforcement actions under former Chair Gary Gensler.
Peirce recently outlined her vision for crypto regulation, criticizing the SEC’s prior approach as legally ambiguous and impractical. She has called for a regulatory framework that balances investor protection with industry innovation. As part of this initiative, she is encouraging crypto firms to apply for no-action letters—assurances that their activities will not trigger enforcement actions. She has also suggested that token issuers seek preemptive clarity from the SEC regarding whether their offerings would be classified as securities.
This marks a stark departure from Gensler’s stance, which categorized nearly all crypto assets as securities and led to numerous enforcement actions. Many of the SEC lawyers involved in those cases are now being reassigned, according to reports.
Beyond cryptocurrency, the SEC has reportedly instructed its enforcement lawyers to seek approval from politically appointed commissioners before launching formal investigations. This reverses a post-2008 reform that allowed SEC staff to authorize investigations independently.
Igor Rozenblit, managing partner at regulatory consultancy Iron Road Partners and a former SEC official, notes that this move reverts the SEC’s enforcement process to its pre-Madoff era. Before the financial crisis, investigations were often stymied by bureaucratic delays. Rozenblit warns that reinstating these barriers could make it harder to detect fraud, particularly in today’s complex financial markets.
At the same time, the pressure to reduce government size could further weaken regulatory enforcement. Rozenblit suggests that if the SEC loses experienced staff due to downsizing efforts, it may become less equipped to handle sophisticated financial misconduct.
“The commission risks becoming hamstrung by process,” he says. “With senior departures seemingly a priority of DOGE, the SEC may struggle to keep pace with the growing complexity of financial markets. This trajectory feels eerily familiar—and could ultimately lead to another crisis.”
For wealth advisors and RIAs, these changes present both opportunities and risks. On one hand, a more relaxed regulatory environment could ease compliance burdens and provide greater flexibility in investment strategies. On the other, reduced oversight may lead to greater market volatility, increased risks of fraud, and a potential erosion of investor protections.
As the regulatory landscape shifts, wealth advisors must stay vigilant. The easing of enforcement does not eliminate fiduciary responsibilities or the need for robust due diligence. If anything, it reinforces the importance of self-regulation and adherence to best practices in an environment where official watchdogs may be pulling back.
With the SEC’s approach to crypto evolving, advisors who engage with digital assets should closely monitor regulatory developments. Peirce’s call for a clearer framework could create new investment opportunities, but the lack of immediate clarity still poses risks. Advisors must balance innovation with caution, ensuring that any crypto-related investments align with clients’ risk tolerance and long-term financial goals.
Moreover, with compliance departments potentially facing fewer regulatory mandates, firms should consider reinforcing their internal controls. A rollback in enforcement does not mean regulators will turn a blind eye to misconduct. RIAs who maintain strong compliance programs will be better positioned to navigate the changing regulatory landscape while continuing to prioritize client interests.
In this new era of deregulation, the responsibility for maintaining ethical standards and prudent financial practices will increasingly fall on firms and advisors themselves. While fewer regulatory hurdles may seem beneficial in the short term, the long-term implications remain uncertain. For advisors, the key takeaway is clear: Stay informed, stay compliant, and always act in the best interest of clients—regardless of whether regulators are watching.
