FinReg Currents - Week 1

Each week of the first 100 days of the new Trump Administration, we will publish updates on key federal financial services regulatory and related developments.

This week, we review the following developments as of Wednesday:

• Regulatory Freeze Pending Review;
• Hiring Freeze;
• Recission of the Biden Artificial Intelligence (AI) Executive Order;
• New Securities and Exchange Commission (SEC) Acting Chairman and crypto task force;
• New Federal Deposit Insurance Corporation (FDIC) Acting Chairman and regulatory priorities; and
• New Commodity Futures Trading Commission (CFTC) Acting Chairman.

Regulatory Freeze Pending Review

On January 20, 2025, President Trump issued a Regulatory Freeze Pending Review (“Regulatory Freeze”) that applies to all executive departments and agencies. The Regulatory Freeze prohibits the proposal or issuance of any rule until a department or agency head appointed or designated by President Trump, or a delegate, reviews and approves the rule. Under the Regulatory Freeze, there are carveouts to address emergency situations or other urgent circumstances, including rules that are subject to statutory or judicial deadlines that require prompt action.

The Regulatory Freeze also requires the immediate withdrawal of any rules that have been sent to the Office of the Federal Register but not yet published in the Federal Register. In addition, federal agencies are directed to consider postponing for 60 days from January 20 the effective date for any rules that have been published in the Federal Register, or any rules that have been issued but have not taken effect, for review.

After the 60 days, no further action will be required except for rules that raise substantial questions of fact, law, or policy. Such rules require further action on behalf of the agency in consultation with the Office of Management and Budget Director.

The Regulatory Freeze could affect several proposed and final rules issued by the Consumer Financial Protection Bureau (CFPB) at the end of the prior administration, including the supervision of large providers of digital wallets and payment apps and fees for overdraft services. Other banking agencies’ rulemakings, as discussed further below, are expected to be reviewed as well.

Hiring Freeze

On January 20, 2025, President Trump also issued a Hiring Freeze, which will be applied throughout the executive branch on the hiring of federal civilian employees. Under the Hiring Freeze, no federal civilian position that was vacant at noon on January 20, 2025, may be filled, and no new positions may be created except as otherwise provided for in the Hiring Freeze or other applicable law. With certain exceptions, the Hiring Freeze applies to all executive departments and agencies regardless of their sources of funding.

Within 90 days, the OMB Director, in consultation with the Director of the Office of Personnel Management (OPM) and the Administrator of the U.S. Department of Government Efficiency, are instructed to develop a plan to reduce the size of the federal government, after which the hiring freeze would be lifted.

The Hiring Freeze does not apply to military personnel or to positions related to immigration enforcement, national security, or public safety; nor will it have an adverse impact on provision of Social Security, Medicare, or veterans’ benefits. In addition, the OPM Director may grant exemptions from the Hiring Freeze where necessary. The Hiring Freeze does not limit the nomination and appointment of officials to positions requiring Presidential appointment or Senate confirmation, among other exceptions.

Recission of Biden AI Executive Order

On January 20, 2025, President Trump revoked the AI Executive Order issued by former President Biden in October 2023, Executive Order 14110 on the Safe, Secure, and Trustworthy Development and Use of AI. Executive Order 14110 directed more than 50 federal agencies, including the Treasury Department and the CFPB, to address specific AI issues, and established new standards for AI safety, security, and innovation across a range of industries, including technology and financial services.

According to press reports, President Trump has said that he plans to issue a new Executive Order on AI.

SEC New Acting Chairman and Crypto Task Force

On January 21, 2025, the SEC announced that President Trump designated Commissioner Mark Uyeda as Acting Chairman of the SEC until Paul Atkins, President Trump’s nominee to lead the agency, is confirmed. Uyeda has been a Commissioner since 2022 and a member of the SEC staff since 2006, serving as senior advisor to former Chairman Jay Clayton, counsel to former Commissioners Michael Piwowar and Paul Atkins, and assistant director and senior special counsel in the Division of Investment Management.

On the same day, Acting Chairman Uyeda announced the launch of a crypto task force (“Task Force”) to develop a “comprehensive and clear” regulatory framework for crypto assets. The Task Force will be led by Commissioner Hester Peirce. Richard Gabbert, senior advisor to the Acting Chairman, will serve as the Task Force’s chief of staff, and Taylor Asher, senior policy advisor to the Acting Chairman, will serve as the chief policy advisor of the Task Force.

According to the SEC, the focus of the Task Force will be to help the agency “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.” Although it can be difficult to predict what framework the Task Force will propose, the digital asset industry has long sought a tailored regulatory framework and providing interpretive guidance to intermediaries seeking to use distributed ledger technology to modernize the financial infrastructure and promulgating clear registration paths for securities intermediaries including broker-dealers, exchanges, transfer agents, and clearing agencies.

FDIC New Acting Chairman and Regulatory Priorities

On January 20, 2025, President Trump appointed FDIC Vice Chairman Travis Hill as Acting Chairman of the FDIC. Former FDIC Chairman Martin Gruenberg left the agency on January 19, 2025. According to press reports, Hill is the leading contender for President Trump to nominate as the FDIC’s permanent Chairman.

On January 21, 2025, Hill issued a statement announcing the agency’s regulatory priorities for the coming months. These include:

• A wholesale review of FDIC regulations, guidance, and manuals;
• A more open-minded approach to innovation and technology adoption;
• Withdrawal of the agency’s August 2024 proposed rule on brokered deposits;
• Improvement of the bank merger approval process;
• Improvement of the supervisory process to focus more on core financial risks and less on process, and reevaluation of the supervisory appeals process; and
• Modernization of the implementation of the Bank Secrecy Act.

CFTC New Acting Chairman

On January 20, 2025, the CFTC announced that members of the Commission unanimously elected Commissioner Caroline Pham as Acting Chairman after former Chairman Rostin Behnam’s departure. Pham was sworn in as a CFTC Commissioner in April 2022 after spending much of her 24-year career in the private sector, which included more than 10 years of experience in crypto and digital assets.

For more details on any of these developments, or to discuss how these changes may impact your business, please reach out to our team. Stay tuned for next week’s update, where we will continue to bring you the latest in federal financial services regulatory and related developments.