Ten Steps To Navigate The Regulatory Reset

Forbes

16-06-2025

Paul Davis, Founder, Bank Slate.
If you feel like we've stepped into a DeLorean and gunned it to 88 mph, you're not alone.
Many anticipated that a second Trump Administration would unwind Biden-era financial regulations. Few, however, expected the rollback to come this fast or hit this hard. In just a few months, regulatory dials have been spun with a velocity that would make Doc Brown's head spin. The Consumer Financial Protection Bureau (CFPB) withdrew 67 interpretive rules in a single day—a dramatic move that underscores the speed of change now underway.
This reset isn't confined to obscure policy corners. It's sweeping across the regulatory spectrum: consumer protection, crypto oversight, M&A, reputational risk and more. We are witnessing a wholesale dismantling of key regulatory scaffolding. Assumptions that held true even six months ago no longer apply.
The result is a dramatically reshaped environment in which banks and fintechs must reassess strategy, compliance and risk in real time. For institutions hoping to stay ahead, agility and foresight are now paramount. Below, I will distill the most consequential reversals and share steps financial leaders can take to adapt with confidence.
The CFPB, for instance, filed a motion for summary judgment in the U.S. District Court for Eastern Kentucky to undo its own open banking rule.
The Office of the Comptroller of the Currency (OCC), meanwhile, took steps to rescind a 2024 policy statement that enhanced its review of large bank merger applications. The Federal Deposit Insurance Corporation (FDIC) informed banks it supervises that the agency does not need to sign off on plans to pursue certain crypto-related activities.
While federal oversight is receding, the notion that risk is disappearing is dangerously misleading. What we're seeing is not the disappearance of regulation but a shift in its gravity—ideologically and geographically.
As federal agencies pull back, state lawmakers and regulators will step forward. The New York state attorney general recently filed a lawsuit against Capital One, alleging that the financial firm used 'bait-and-switch tactics' with its online savings account customers after the CFPB backed off the issue. The California Department of Financial Protection and Innovation hit Hatch Bank with a consent order that took issue with the bank's AML/CFT compliance.
The takeaway? Financial institutions must closely monitor state-level activity to avoid being blindsided.
To be sure, this is not the moment to chase every high-growth opportunity. I am not recommending that institutions jump into BNPL, crypto or tokenized lending. But I am strongly advocating that executives build fluency in these models, understand emerging risks and develop documented rationales for why certain paths are—or are not—being pursued. Even opting out requires strategic intent.
Here are more things to keep in mind as the tide shifts.
1. Stay educated—but selective. Deepen your understanding of emerging models such as embedded finance, tokenized payments, digital wallets and AI underwriting. It will help you cut through the hype and evaluate real alignment with your mission.
2. Watch the states. Assign someone to track state-level legislation and enforcement, especially in your core markets. Many future compliance risks will originate outside Washington.
3. Govern with discipline. Deregulation has lowered the waterline, but sound governance is still your best defense. Revisit board oversight, vendor risk reviews and incident response protocols.
4. Map third-party risk. As federal supervision recedes, risk flows downstream. Evaluate your fintech partners and vendors. Understand how their compliance gaps could become your exposure.
5. Use the breathing room to modernize. Take advantage of the regulatory reprieve to upgrade core systems, strengthen data governance and invest in scalable RegTech solutions.
6. Scenario plan for emerging enforcement themes. Even amid rollback, new priorities will emerge. Prepare for future scrutiny around AI bias, synthetic identity fraud, privacy and algorithmic discrimination.
7. Strengthen culture and ethics programs. Public expectations remain high. Use this time to reinforce values and train teams, because internal discipline is still your first line of defense.
8. Maintain BSA/AML vigilance. Despite the deregulatory trend, BSA/AML remains a top enforcement priority. Keep enhancing transaction monitoring and SAR protocols.
9. Stay engaged with regulators. Regular communication with examiners builds trust and helps anticipate changes before they become challenges.
10. Document, don't assume. If your institution is adapting policies or pausing initiatives based on the current regulatory tone, put it in writing. Examiners under future administrations may ask why.
Deregulation may lighten the compliance load in the short run, but it doesn't eliminate risk. Reputational and operational risks remain very real. The most successful financial institutions will treat this moment not as a green light to accelerate, but as a rare chance to modernize, reassess and build long-term resilience.
This year's regulatory shifts are not a pause. They are a pivot—and those who pivot with purpose and discipline will position themselves to come out ahead.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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