Our Take: financial services regulatory update – October 3, 2025

October 03, 2025

Change remains a constant in financial services regulation

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

Digital assets: Market regulators take steps toward harmonization and clarity

What happened? The following notable activities took place this week regarding digital assets:

On September 29th, the SEC and CFTC held a joint roundtable on regulatory harmonization efforts, which primarily focused on regulation and oversight of digital assets.
The SEC issued two no-action letters:
- On September 29^th, it issued a no-action letter to a blockchain infrastructure network that issued tokens to incentivize users to participate in the network, explaining that the use case of these tokens differs from capital raising activities and therefore the agency does not consider them to be “securities” subject to SEC oversight.
- The next day, on September 30^th it issued a no-action letter stating that it would not recommend enforcement against investment advisors and funds that use state-chartered trust companies to custody crypto assets as long as certain standards are met, including¹ confirmation of the trust’s controls to safeguard assets; and² written custody agreement that includes prohibitions on lending customer assets and co-mingling customer assets.
On September 30^th, the President withdrew his nomination of Brian Quintenz to be CFTC Chair. Quintenz was a CFTC Commissioner from 2017 to 2021 and has worked in the digital assets industry following his tenure.

What was discussed at the SEC-CFTC roundtable? Topics included:

A clear crypto regulatory framework. Leadership from both the SEC and CFTC stressed the need for both agencies to align on a clear regulatory framework to provide supervisory certainty and avoid overlapping requirements, with CFTC Acting Chair Caroline Pham declaring “the turf war is over” and SEC Chair Paul Atkins echoing similar sentiments. Chair Pham and Chair Atkins both expressed that a clear framework would bring back market participants that were previously pushed outside of the US due to regulatory uncertainty.
Current challenges. Panelists highlighted areas that could be addressed by SEC and CFTC coordination, including varying definitions of terms related to digital assets and different data reporting requirements (the SEC requires 148 fields; the CFTC requires 132).
Quick and transparent approvals. Panelists from the industry advocated for quick and transparent reviews for product approvals, with some advocating for a self-certification process where a product can be listed after a certain timeframe unless the regulator objects.
Innovation exemptions. Certain panelists stressed that while they support the idea of innovation exemptions, they must be applied carefully to ensure that all parties are on an equal playing field.

Our Take

A good first step toward harmonization, but the devil is in the details

The SEC-CFTC roundtable showed a united front – at least in most areas – among leadership at the SEC, CFTC and industry participants around current challenges and priority areas to provide regulatory clarity and support digital asset innovation. However, it was clearly a first step in the long road toward harmonization as no concrete initiatives or plans for joint guidance or rulemakings were announced.

With the CLARITY Act still being debated in the Senate and consensus yet to be reached around items such as illicit finance protections and developer liability, it will be difficult for the agencies to pursue many harmonization efforts before market structure legislation providing definitions, asset classification and other requirements becomes final (for more information, see Our Take here). Further complicating efforts toward harmonization is the lack of a confirmed CFTC Chair and Acting Chair Pham currently serving as the sole member of the five-seat Commission. Both the government shutdown and the withdrawal of Quintenz’s nomination will only delay the confirmation of new nominees who could be leading efforts to drive harmonization in several critical areas.

The SEC continues to forge ahead

Despite the obstacles toward harmonization, the SEC is moving forward with its goals of encouraging innovation and providing regulatory clarity for crypto. The SEC has very rarely released no-action letters related to digital assets, and when it has they have tended to be narrowly focused on a detailed set of facts and circumstances. In contrast, the two no-action letters this week have broader implications, shining a light on the agency’s views in the areas of tokenization and custody.

While the no-action letters continue to reveal the SEC’s more permissive stance around digital assets, the inclusion of required safeguards for state-charted trust companies shows that crypto is no longer the “wild west” and the agency is prepared to scrutinize risk management practices in examinations. It also provides a roadmap for investment advisers and funds looking to custody assets and for trust companies looking to provide custody services, directing focus to due diligence, contract management and third-party risk management for investment advisers and funds, and around controls and other safeguards for trust companies. Firms should make sure they are following this roadmap as the doors continue to open for digital assets.

What’s the bottom line?

The SEC-CFTC roundtable is a promising first step, but several obstacles continue to hinder tangible progress toward harmonization. Meanwhile, the SEC continues to forge ahead with its goal of providing regulatory clarity.

SEC provides update on Treasury clearing implementation

What happened? On September 30th, the SEC launched a new Treasury Clearing Implementation webpage that centralizes updates, staff statements, and reference materials. Alongside the launch, Commissioner Mark Uyeda issued a statement highlighting industry questions the SEC has addressed and those still outstanding. In addition, the Division of Trading and Markets released a new set of FAQs clarifying key definitions and covered transaction types.

Separately, on September 29th, CME Group filed with the CFTC to expand its cross-margining arrangement with DTCC’s Fixed Income Clearing Corporation (FICC) to include end-user clients. DTCC plans to make a similar filing with the SEC.

What is the current status of Treasury clearing implementation? The SEC finalized its Treasury clearing rule in December 2023 to require central clearing of “eligible secondary market transactions” in U.S. Treasury securities. Originally, the compliance dates were set for December 2025 (cash market) and June 2026 (repo market). However, in February 2025, the SEC extended the implementation timeline by one year to allow more time for operational readiness and coordination. Uyeda’s statement says that the SEC currently “does not intend to consider further extensions of the compliance dates.”

What issues has the SEC recently addressed?

Mixed-CUSIP triparty repo exclusion: The new FAQs clarified that general collateral triparty repos are not considered “eligible secondary market transactions” if U.S. Treasuries are allocated as collateral after trade execution based on a pre-established eligibility schedule. Only repos specifically structured to include Treasury securities from the outset are subject to the clearing rule.
Accounting treatment of cleared repos: In response to an industry consultation, the SEC did not object to the conclusion that intermediaries providing access to clearing should be considered agents, not principals, for accounting purposes – meaning they do not need to record their clients’ Treasury repo trades on their own balance sheets.
Broker-dealer pre funding: In August, the Division of Trading and Markets issued FAQs on the application of Exchange Act Rule 15c3-3a confirming that broker-dealers are permitted to deliver cash, as well as Treasury securities, to a clearing agency to pre-fund customer margin requirements. The FAQs also clarified that a broker-dealer can record a debit in its reserve formula for the prefunded amount even before receiving collateral back from the customer, provided it collects the required margin from the customer by the following business day.

What issues remain? Uyeda highlighted a number of remaining action items, including:

Determining whether and how the exemption for trades between affiliated entities should be expanded.
Clarifying how the rules apply to cross-border Treasury transactions and non-U.S. entities.
Addressing concerns that registered investment funds may face duplicative margin requirements.
Determining how Treasury securities can be cross-margined with related futures positions at the customer level.
Explaining how margin and clearing obligations apply in the event of settlement failures or disruptions.
Assessing whether customer accounts should be margined on a gross or net basis.

What’s next? Firms need to be prepared to centrally clear covered cash market Treasury transactions by December 31st, 2026 and covered repo market Treasury transactions by June 30th, 2027. The SEC will continue to issue additional FAQs or guidance to address outstanding issues.

Our Take

Transparency brings focus to hard work ahead for Treasury clearing

The SEC’s clearing website and Commissioner Uyeda’s statement add transparency to the agency’s ongoing work to facilitate the implementation of expanded Treasury clearing and highlight the numerous technical details involved. The update also shows progress in resolving some of those details, with staff providing expected but necessary clarity on accounting and CUSIP treatment. In parallel, CME’s filing to extend cross-margining to end users is an important step, but it also underscores how complicated the landscape will become as multiple CCAs are introduced. Firms will need to determine where and how transactions should be routed, which requires early engagement to understand client preferences and to align offerings accordingly. However, they also need to wait for rulebook updates for specific FICC offerings as well as the other potential CCAs.

Clarification around the remaining issues identified by Uyeda will drive further adjustments to implementation. Interaffiliate treatment will be significant for firms that rely on affiliate trades for balance sheet management, liquidity, and risk transfer – making it critical that firms understand their flows across entities and assess how those transactions fall within scope of the mandate. Cross-margining has the potential to deliver capital efficiencies that institutional clients are seeking, but firms will only capture those benefits if they are set up to facilitate it at the client level, with the right account structures, documentation and margin flows in place. Questions around failed trades and clearing agency outages must be resolved to ensure operational resilience, while decisions on gross versus net margining will have significant implications for liquidity management. Each of these areas will require firms to adapt their systems, processes and documentation – including re-papering existing offerings as well as negotiating new arrangements. With the Commission signaling that no further extensions will be granted, firms must continue advancing their preparations to be ready for the upcoming compliance dates.

What’s the bottom line? The SEC’s updates provide needed clarity and highlight progress, but with unresolved policy questions and significant work still ahead, firms must stay focused on implementation to be ready for the 2026 and 2027 compliance deadlines.

On our radar

These notable developments hit our radar recently:

HFSC announces October hearing schedule. On September 26th, the House Financial Services Committee released its October 2025 hearings calendar, including sessions on AI in financial services (Oct. 8th), oversight of regulators (Oct. 22nd) and more.

FinCEN seeks comment on the costs of AML/CFT compliance. On September 29th, FinCEN issued a Survey of the Costs of AML/CFT Compliance. The survey focuses on non-bank financial institutions such as casinos, money services businesses, and insurers, seeking information on direct costs attributable to AML/CFT obligations. Comments are due by December 1st.

Travis Hill nominated as FDIC Chair. On October 1^st, Trump nominated Travis Hill to serve as Chairman of the FDIC Board of Directors. Hill has been Acting Chair since January.

Adrienne Harris to depart NYDFS. On September 27th, NY Governor Kathy Hochul announced that Superintendent Adrienne Harris will step down from the New York Department of Financial Services after four years of service effective October 18th. Her successor, Kaitlin Asrow, is the current Executive Deputy Superintendent for Research & Innovation and will serve as Acting Superintendent.

Fed’s Waller outlines payment innovation priorities. On September 25th, Fed Governor Christopher Waller spoke on payments innovation. He signaled strong interest in regulated stablecoins, tokenized deposits, and interoperable distributed ledger technology (DLT) platforms to reduce cross-border friction and enhance efficiency – likely themes at the upcoming Fed Payments Innovation Conference on October 21st.

CFPB considers ECOA rulemaking to clarify compliance obligations. On September 30th, the CFPB announced that it is preparing a proposed rule under the Equal Credit Opportunity Act (ECOA) and Regulation B to clarify compliance obligations.

CFPB extends small business lending compliance dates. The CFPB finalized an extension of the compliance dates for its rule to implement Dodd-Frank Act Section 1071 small business lending data collection requirements. The earliest new compliance date for the highest volume lenders is now July 1^st, 2026 with the first filing deadline on June 1^st, 2027.

Agencies remind lenders of flood insurance requirements during NFIP lapse. On October 1st, the Farm Credit Administration, FDIC, Federal Reserve, NCUA, and OCC issued joint guidance clarifying that lenders may continue to make loans subject to federal flood insurance statutes even when the National Flood Insurance Program (NFIP) is unavailable.

FDIC to consider proposals on reputation risks and unsafe or unsound practices. On October 7th, the FDIC Board of Directors will hold a public meeting to review two proposed rules: one regarding prohibition on use of reputation risk by regulators in supervision and another concerning unsafe or unsound practices and Matters Requiring Attention (MRAs).

SEC issues order to reduce CAT operating costs. On September 30th, the SEC issued an order granting conditional exemptive relief under the Consolidated Audit Trail (CAT) NMS Plan. This order eases certain reporting and data retention requirements and cuts expenses while maintaining core regulatory functions. The Commission said the changes are expected to lower 2025 CAT costs by $20–27 million, reducing projected expenses to about $196 million from the originally approved $248 million.

^{[1] FICC is currently the only SEC-registered covered clearing agency (CCA) for U.S. Treasury securities. CME Group has applied to become a CCA and its application is under review by the SEC.}

^{[2] Exchange Act Rule 15c3-3a is a part of the SEC’s Customer Protection Rule that stipulates how broker-dealers need to calculate and maintain segregated reserves to safeguard customer funds and securities.}