Financial institutions should resist treating regulatory change as a series of isolated political events. Instead, they must recognize that technology, geopolitical uncertainty, market globalization, and shifting public expectations are combining to resha
Speaking
at CeFPro's latest Risk Americas conference event, the Head of US Markets
Regulatory Policy at a major international investment bank described a
regulatory environment that is evolving faster than many policymakers can
comfortably manage.
While affordability, housing and
private credit remain important policy concerns, she said technological
innovation has rapidly moved to the top of the agenda, with artificial
intelligence, digital assets, cybersecurity and operational resilience dominating
conversations across Washington.
The senior executive explained that
one notable characteristic of these emerging issues is their lack of political
polarization.
Unlike previous debates surrounding
digital assets, concerns about AI, cyber resilience and operational risk have
become broadly bipartisan because regulators themselves are still developing
their understanding of the technologies.
"Top of mind for everybody right
now is technological innovation," she said. "Those issues are not
political right now, which is really unusual."
Rather than arriving with
predetermined policy positions, regulators are increasingly asking industry
participants practical questions about the threats they face, where
vulnerabilities exist and how firms are strengthening their defenses.
That uncertainty, she argued,
presents an opportunity for the financial services industry to influence future
regulation.
Policymakers are actively seeking
guidance from practitioners on emerging risks, best practices and warning signs
that indicate potential misconduct or operational failures.
"They are very much looking for
that kind of guidance," she said. "Industry-led efforts to say to the
regulators, this is what good looks like. This is what you should codify, is
going to be really valuable."
She added that firms working directly
with regulators can help produce rules that are both more robust and more
reflective of operational reality.
Digital assets provided another
example of regulation beginning to mature after years of uncertainty.
The executive noted that regulators
are now moving beyond broad policy debates toward building practical market
infrastructure covering areas such as custody, market structure, transfer
agents and token issuance.
"I think the regulators are
digging in and making rules," she said, explaining that earlier
uncertainty around digital assets often stemmed from firms simply not knowing
which rules applied.
She predicted that future regulatory
development will increasingly focus on integrating tokenized assets into
existing financial markets rather than treating digital assets as an entirely
separate asset class.
Despite continuing political debate,
she believes digital assets are unlikely to disappear following future
elections.
Instead, policymakers appear
increasingly focused on creating durable regulatory frameworks capable of
surviving changes in administration.
"I don't think that if there's a
Democrat in the White House, that digital assets is going to be the place that
they go to sort of rip up everything that's been done," she said.
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