Regulatory Reset: Lessons from Past Cycles on 2025's Compliance Cost Equation

The second Trump Administration delivered a decisive structural reset to U.S. regulatory policy in 2025, creating a new operating environment defined by permissiveness and strategic focus. The core shift was a fundamental embrace of digital assets, signaled by the President's executive order declaring a policy of favoring the "responsible growth" of digital assets and blockchain technology. Regulators swiftly followed, rescinding most Biden-era guidance that had previously discouraged banks from crypto activity. This wasn't incremental tinkering; it was a radical change in the tone and trajectory of federal policy, opening the door for banks to hold digital assets and engage in crypto-asset transactions under a new, more supportive framework.

This policy pivot was accompanied by a stated refocusing of supervisory efforts. Agencies signaled a move away from micromanaging governance formalities toward concentrating examinations on material financial risk. The intent was clear: reduce friction for innovation while maintaining a laser focus on systemic safety. This recalibration created immediate strategic opportunities, particularly for fintech and digital-asset firms seeking to move core banking functions inside a regulated perimeter.

Yet, the setup for 2026 points to a sharp reversal in enforcement dynamics. Legal experts anticipate a surge in investigations and emergency actions as the new regime takes hold and the regulatory perimeter resets. The environment of unprecedented uncertainty, coupled with a reorganized DOJ prioritizing criminal prosecutions for trade and customs fraud, sets a precedent. The compliance function, thrust into the center of strategic conversations, now faces a new imperative: implement weekly compliance check-ins to navigate a landscape where the rules are being rewritten even as scrutiny intensifies. The structural shift toward permissiveness is likely to be offset by a wave of enforcement actions, testing companies' ability to adapt to a volatile and high-stakes environment.

Historical Parallels: Deregulation and the Fraud Surge

The current regulatory reset echoes a recurring pattern: periods of reduced oversight often create openings for financial crime. The 2025 landscape shows clear parallels to past cycles where innovation and deregulation were followed by a surge in fraud, as organized criminals adapted to new vulnerabilities.

The post-2008 financial crisis period offers a direct historical parallel. After the complex derivatives market was largely unregulated, organized crime rings were responsible for the majority of fraud attempts, exploiting the new, opaque financial products. This mirrors the current setup, where the rapid embrace of digital assets under a permissive framework may be creating fresh vectors for attack. The data shows the trend is already underway, with 60% of financial institutions reporting an increase in fraud over the past year, and nearly a third suffering losses exceeding $1 million.

Technology adoption by fraudsters consistently outpaces regulation. Just as the dot-com bubble saw criminals rapidly weaponize new internet tools, today's fraud rings are leveraging generative AI at scale. The consistent use of AI in scams like phishing and account takeover echoes the rapid adoption of new technologies by fraudsters after the dot-com bubble. This creates a persistent cat-and-mouse game where compliance teams must constantly adapt.

This focus on traditional fraud also aligns with a broader regulatory cycle. The SEC's recent shift under new leadership, which has slowed enforcement activity significantly and focused on "lying, cheating, and stealing," parallels a return to core violations after more expansive regulatory theories. In both cases, a relaxation of the regulatory perimeter is met with a strategic refocus on the most damaging, direct harms. The lesson from history is that permissiveness can be a double-edged sword, and the compliance function is often left to manage the fallout.

Enforcement and Compliance: The Net Cost Equation

The regulatory reset of 2025 promises lower formal compliance costs, but the net effect for businesses is likely a wash-or worse. The reduction in bureaucratic oversight is being more than offset by a surge in fraud losses and the rising cost of navigating a more aggressive enforcement landscape.

The primary risk is that the easing of regulatory formalities is being more than compensated for by higher fraud losses. The data shows a clear trend: 60% of financial institutions and fintechs reported an increase in fraud over the past year, with organized crime rings responsible for the majority of attempts. This isn't a future threat; it's a current reality. As the regulatory perimeter opens for digital assets and other innovations, fraudsters are adapting quickly, using AI to weaponize new attack vectors. The cost of these attacks is substantial, with nearly a third of institutions reporting losses exceeding $1 million. In this environment, the savings from fewer compliance checklists could be quickly erased by the bottom-line hit from fraud.

This dynamic is compounded by a shift in enforcement focus. While some areas of regulation are being relaxed, investigations are becoming more complex and frequent. The DOJ's reorganized priorities, which include a focus on criminal prosecutions for trade and customs fraud, set a precedent for targeted scrutiny. Companies must now manage a dual pressure: proactively defending against sophisticated fraud while preparing for potential investigations. The cost of capital and reputational damage rise for those who fail to get ahead of these risks. As legal experts note, the new regime demands implement weekly compliance check-ins to navigate the volatility, turning what was once a periodic audit into a continuous operational burden.

Key watchpoints will determine the final cost equation. The pace of tariff-related investigations will test corporate legal departments. The evolution of business email compromise tactics, where third-party impersonation remains the most frequent type of BEC scam, will dictate the investment needed in treasury controls. And the SEC's refocused agenda, which includes protecting retail investors, will shape compliance priorities for public companies. The bottom line is that the net compliance cost is not a simple subtraction. It's a complex sum of lower regulatory friction against higher fraud losses and the rising expense of managing a more volatile enforcement cycle. For most businesses, the reset is raising the total price of doing business.