2025 Regulatory Compliance and Enforcement Recap: Recalibration, Not Retreat
TL;DR: While 2025 saw regulatory agencies shift from headline-grabbing enforcement to quieter, targeted actions, core compliance expectations remained firmly in place. Firms that mistook evolving regulatory style for reduced standards found themselves unprepared when examiners arrived.
Entering 2025, financial services firms faced a regulatory environment shaped by uncertainty. A new administration, staffing reductions at regulatory agencies, emerging technologies, and global economic pressures combined to produce outcomes that were difficult to predict at the start of the year.
Some expectations proved correct. Others evolved in more nuanced ways. What ultimately emerged was not a retreat from regulation, but a recalibration of how regulators pursued enforcement and oversight.
This recap examines what we anticipated heading into 2025, how those expectations were realized in practice, and what compliance leaders should carry forward into 2026.
2025 regulatory predictions: Expectations vs. reality
| Prediction | What we said | What happened in 2025 | Assessment | Why it matters |
|---|---|---|---|---|
| Regulation by enforcement would decline | Headline-driven enforcement and blockbuster settlements would slow |
|
Correct | Quieter enforcement still required strong, provable compliance programs |
| Off-channel communications enforcement would soften | Standalone recordkeeping cases would be deprioritized | Major settlements faded, but off-channel gaps worsened exposure in broader investigations and exams | Correct | Off-channel risk became an accelerant, not a standalone violation |
| Regulators would take a more pro-crypto and pro-AI stance | Less litigation and more innovation-focused messaging | Rulemaking slowed and tone shifted, but existing supervision, disclosure, and recordkeeping obligations remained | Correct | Adoption of AI outpaced governance in many compliance programs |
| Rule modernization would accelerate | Outdated requirements would be updated, and burden reduced | Limited progress due to staffing and competing priorities | Not yet realized | Modernization remains an open issue for 2026 |
Prediction 1: Regulation by enforcement would decline
Assessment: Correct
One of the clearest shifts in 2025 was a move away from headline-driven enforcement actions designed to reshape industry behavior through large, public settlements. Enforcement activity declined in volume and visibility, and regulators emphasized procedural fairness and transparency in public remarks.
However, this shift did not signal reduced expectations. Core priorities around supervision, investor protection, governance, and accountability remained firmly in place.
What this meant in practice was fewer blockbuster cases, but greater scrutiny during examinations. Regulators focused less on making examples and more on whether controls actually worked. Firms that interpreted quieter enforcement as regulatory relief often struggled to defend their programs when exams arrived.
Prediction 2: Off-channel communications enforcement would soften
Assessment: Correct
Major off-channel communications settlements that defined prior years largely faded in 2025. This aligned with expectations that regulators would deprioritize administrative recordkeeping cases in isolation.
Yet off-channel communications did not disappear as a risk. Instead, they became a complicating factor in broader investigations involving supervision failures, investor harm, and disclosure issues. When firms could not reconstruct communications, examinations slowed, and enforcement exposure increased.
The result was a subtle but important shift: Off-channel risk moved from being a primary violation to an accelerant of other regulatory failures.
Prediction 3: Regulators would adopt a pro-crypto and pro-AI posture
Assessment: Correct
Regulatory posture toward crypto and artificial intelligence evolved meaningfully in 2025. Litigation slowed, rulemaking paused, and public messaging emphasized innovation and competitiveness rather than restriction.
At the same time, regulators consistently reinforced that existing obligations still apply. Communications, disclosures, supervision, and recordkeeping requirements were not relaxed simply because products or tools were new.
What firms experienced was rapid adoption outpacing governance. AI-enabled tools increasingly touched communications, supervision, and records in ways many compliance programs were not yet designed to oversee.
Prediction 4: Rule modernization would accelerate
Assessment: Not yet realized
While regulators signaled interest in modernizing outdated requirements and reducing regulatory burden, substantive reforms remained limited in 2025. Staffing constraints and competing priorities slowed progress, leaving many long-standing obligations unchanged.
This remains an open issue heading into 2026.
What 2025 ultimately revealed
Across these predictions, a consistent lesson emerged. Regulatory style changed faster than regulatory expectations.
Enforcement became quieter and more targeted, but expectations around governance, accountability, and proof of compliance endured. Firms that succeeded invested in defensible programs, validated their controls, and treated compliance as an operational discipline rather than a reaction to headlines.
Those lessons now shape the path into 2026, where acceleration in AI adoption, third-party risk, and digital communications may further test compliance frameworks.
Watch out for our 2026 Regulatory Predictions to see how these themes are expected to intensify and what compliance leaders should prepare for next.
How Smarsh can help
Smarsh provides the technology foundation that enables firms to adapt to evolving regulatory expectations while maintaining operational efficiency. Our unified, AI-native communications capture, archiving, and supervision platform helps compliance teams demonstrate program effectiveness during examinations — regardless of how enforcement priorities shift.
Contact your Smarsh representative to discuss how our platform can help your organization navigate the continuing regulatory recalibration in 2026.
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