A dramatic and forceful swing of America's "regulatory pendulum" is reshaping the nation's financial landscape following the election of President Donald Trump. The most powerful market watchdog, the Securities and Exchange Commission (SEC), is at the epicentre of this transformation, led by a tight-knit team of veteran Republicans who are moving with unprecedented speed to unwind recent policies.
The New Guard Takes Charge at the SEC
Paul Atkins, a former commissioner, assumed the role of chair of the SEC on April 21st. He is flanked by commissioners Mark Uyeda (who served as acting chair from January to April) and Hester Peirce. This trio, who previously worked together at the agency under President George W. Bush, now holds three of the top five positions. Their mission is clear: to pull the SEC back from what they see as the activist overreach of the Biden era and return it to its "traditional roots."
Since President Trump took office on January 20th, the agency's new leadership has initiated a sweeping rollback. Key actions include cutting back climate-change disclosure requirements for public companies, dropping high-profile lawsuits against crypto firms, and curtailing the scope of its own enforcement division. This marks a stark philosophical shift from the SEC under Gary Gensler, Trump's predecessor, whom many in the banking and investment community viewed as overly interventionist.
Crypto Clarity and Climate Rule Reversals
The divide is starkly illustrated in the treatment of cryptocurrency. Under Gensler, the SEC pursued an aggressive strategy of enforcement actions to establish that most digital assets were securities. Commissioner Uyeda has criticised this approach as inefficient and politically motivated. "If you believe that, let's put out a commission interpretation that says they are all securities," Uyeda remarked regarding Gensler's stance. The new leadership believes fewer digital assets should be classified as securities, limiting the SEC's purview. Consequently, major cases against firms like Ripple Labs and Coinbase have been dropped.
In traditional markets, the reversal is equally significant. The SEC has paused its legal defence of rules that required public companies to disclose climate-related risks to their operations. Uyeda argues these rules were intrusive and driven by politics rather than genuine financial risk assessment. Similar rules mandating disclosure on "conflict minerals" from the Democratic Republic of Congo are also likely to be axed, following a watchdog report that found they had little impact on mining conditions.
Opening the Floodgates to Private Markets
Perhaps the most consequential change is the SEC's new stance on private markets. The agency is re-examining the decades-old definition of an "accredited investor," which currently requires an individual to have at least $1 million in assets or a $200,000 annual income. Under Uyeda's brief chairmanship, enforcement of these rules was loosened, with more changes anticipated. Uyeda points out the current test can exclude younger, financially savvy individuals while including older investors for whom long-term private equity investments may be unsuitable.
This shift could unlock a massive pool of capital. America's enormous stock of individual retirement account (IRA) and 401(k) savings represents a potential windfall for private equity giants like Apollo and Blackstone. However, for this to happen, seamless cooperation across other agencies is required. The Department of Labor must reassure pension managers that private-market assets meet fiduciary standards, a hurdle given the typically higher fees involved.
The broader regulatory overhaul is still a work in progress. Nominees to lead other crucial agencies, including the Commodity Futures Trading Commission (CFTC) and the Office of the Comptroller of the Currency, await Senate approval. At the Federal Reserve, Governor Michelle Bowman needs legislative approval to become vice-chair for supervision. Meanwhile, the Consumer Financial Protection Bureau has been weakened by budget cuts and lacks a leader.
The ultimate success of this leaner regulatory vision hinges on coordinated action across government. The greatest concern among even Trump-supporting financiers is that the administration's sometimes chaotic approach could undermine this coordination. Without mastering the basics of governance, the current violent swing of the regulatory pendulum—no matter how ambitious—may achieve less in practice than its architects hope.
