Our Take: financial services regulatory update – January 30, 2026

January 30, 2026

Change remains a constant in financial services regulation

Read "our take" on the latest developments and what they mean.

White House nominates Kevin Warsh as Fed Chair

What happened? On January 30th, President Trump announced that he has nominated Kevin Warsh to serve as Fed Chair to replace current Chair Jerome Powell.

What is Kevin Warsh’s background? Warsh was previously appointed to the Fed by President George W. Bush and served from February 2006 to March 2011. During the 2008 financial crisis, he cautioned against the Fed expanding its role beyond what is “statutorily mandated or economically prudent” and called for careful consideration in the Fed’s use of monetary policy, especially when issues would be better addressed by fiscal authorities.” He also spoke against trade protectionism. Following his tenure at the Fed, Warsh has served as a fellow at Stanford University’s Hoover Institution and a scholar at the Stanford School of Business and is a partner at the Duquesne Family Office investment firm.

What has Kevin Warsh said about financial regulation? The majority of Warsh’s public comments have focused on economic and monetary policy. However, he has expressed the following views related to financial regulation:

Fed independence. In an interview in April 2025, he expressed his opinion that the Fed should be independent in conducting monetary policy but that it is not “owed any particular deference in bank regulatory or supervisory policy.”
Limitations on regulatory authority. Warsh has called for regulatory authority to be “explicitly delineated” with clear rules and expectations for firms. He has spoken against regulators “scrutinizing the day-to-day management and operations of financial firms,” noting that doing so would jeopardize a competitive banking system and subject the financial industry to “the changing preferences of Washington.”
Stress testing. Warsh has stated that stress tests were a useful tool in the immediate aftermath of the 2008 financial crisis but quickly became a compliance exercise that has not achieved its goals. He cited the Fed’s liquidity facilities during the 2020 COVID pandemic as an example, noting that banks passed their stress tests but nevertheless needed government assistance.
Disclosures and market discipline. He has also called for increased transparency and quicker access to information around financial firm data such as asset quality and funding sources. He stated that this information should be provided in ways that are understandable and comparable among peers, and that better and faster access to information would help install market discipline and help address risks of government bailouts during stress.
Promoting competition. Warsh has expressed support for policies that encourage competition by removing barriers to new entrants and adjusting policies that favor larger incumbents.

What’s next? Warsh will have a confirmation hearing before the Senate Banking Committee, which will then vote on his nomination before it is considered by the full Senate. With regard to the rest of the Fed Board – Stephen Miran’s term as a Fed Governor is due to end on January 31st, 2026 while Jerome Powell’s term as Chair officially ends in May 2026, although he can remain on the Board as a Governor until 2028.

Our Take

New Fed chair, same regulatory and supervisory direction

After pressuring Fed Chair Powell for some time, including through lawsuits, President Trump has now selected his champion to lead the Fed’s monetary policy direction. What remains to be seen is whether Warsh, who historically has been tough on inflation, will adapt his policy stance to better align with President Trump’s calls for a looser monetary policy. This in turn creates uncertainty around the future path of interest rates, which has broad implications for bank profitability and managing risks associated with commercial real estate loan refinancings in coming years.
With regard to regulation and supervision, he is very likely to defer day-to-day leadership to Vice Chair for Supervision Michelle Bowman, who is the primary steward of the Fed’s supervision and prudential policy. His previously stated views on supervision and regulation align with the direction Vice Chair Bowman has led the Fed following her confirmation, including scaling back scrutiny over process-heavy management and operations functions and limiting the Fed’s role to that explicitly required by statute. Accordingly, supervised institutions should expect continuity in regulatory implementation in the near term, alongside a potentially stronger emphasis from the Chair’s office on reassessing whether existing supervisory tools are delivering clear safety-and-soundness benefits relative to their complexity and cost. Any substantive changes to capital, stress testing, or supervision would still require Board consensus, interagency coordination, and formal rulemaking, and would likely unfold gradually rather than through abrupt shifts tied to the Chair transition.
From a confirmation perspective, Warsh is viewed as a relatively conventional and lower-risk nominee, particularly given his prior service on the Board and familiarity with the institution. While some Senators have publicly stated they are reluctant to move forward with a Fed Chair nomination while a Department of Justice investigation into Chair Powell remains ongoing, Warsh’s profile and prior experience suggest that, absent unexpected developments, his nomination will ultimately advance.

On our radar

SEC and CFTC announce joint “Project Crypto” initiative to enhance regulatory coordination for digital asset markets. On January 29th, SEC Chair Atkins and CFTC Chair Selig announced the relaunch of Project Crypto, a joint initiative aimed at improving interagency harmonization and preparing U.S. markets for an expected federal digital asset framework. The chairs stated that the effort will focus on aligning definitions, coordinating oversight, improving data sharing, developing regulatory on-ramps, and modernizing surveillance tools for on-chain and hybrid market activity. The initiative is intended to complement congressional work on crypto market structure legislation and to reduce regulatory fragmentation affecting digital asset activities.

SEC staff issues statement outlining regulatory considerations for tokenized securities. On January 28th, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets published a staff statement describing how federal securities laws apply to tokenized securities issued or represented through crypto assets. The statement distinguishes between issuer-sponsored tokenized securities and third-party tokenized products, including custodial entitlements, linked securities, and tokenized security-based swaps, and emphasizes that tokenization does not change the underlying security’s regulatory status or applicable registration, disclosure, or trading requirements.

SEC Director Selway highlights steps toward expanding U.S. equity market trading to 24-by-7. On January 28th, SEC Division of Trading and Markets Director Jamie Selway discussed ongoing industry and regulatory work to enable around-the-clock equity trading at the SIMFA Roundtable in DC. He noted recent Commission approvals of overnight trading sessions for certain venues and pending proposals from major exchanges. Selway stated that equity market data plans expect to extend SIP operating hours by the end of 2026 and that NSCC is preparing for expanded availability by mid-2026.

SEC Commissioner Uyeda outlines priorities for revising public company disclosure requirements. On January 26th, Commissioner Mark Uyeda called for streamlining Regulation S-K, recalibrating scaled disclosure thresholds for smaller companies, and re-centering the SEC’s rulemaking on financial materiality. Uyeda highlighted potential reforms to insider-trading, related-party, cybersecurity, and unregistered-offering disclosures, and encouraged broader use of scaled frameworks such as the Emerging Growth Company and Smaller Reporting Company regimes.

Senate Agriculture advances digital asset legislation. On January 29th, the Senate Agriculture Committee advanced the Digital Commodity Intermediaries Act, its version of the House CLARITY Act, along partisan lines (12-11). Despite speculation, the bill did not include the Durbin-Marshall Credit Card Competition Act and other controversial amendments.

ECB to accept certain DLT-issued assets as eligible Eurosystem collateral beginning March 2026. On January 27th, the ECB announced that marketable assets issued in central securities depositories using DLT-based services will become eligible collateral for Eurosystem credit operations starting March 30, 2026, provided they meet existing collateral and settlement criteria. The ECB also launched further work to assess how assets issued and settled entirely on DLT networks could become eligible in the future, noting that any expansion would depend on market, legal, and regulatory developments, including the EU’s DLT Pilot Regime and MiCAR.