Outlook for 2025: Expect the Year Ahead to be Filled with Change in Corporate Compliance

Earlier this week we published a recap of some of the key themes in regulation and corporate compliance over the last year. Now it’s time to look ahead to what 2025 might bring – and as you might expect, “Trump” and “change” are key themes.

Artificial Intelligence

With a new administration heading to the White House, recent federal guidance to create safeguards for the use of AI could be reversed in 2025. According to a Brookings Institution piece on the future of AI policy, President-elect Donald Trump’s administration will likely relax federal regulation on several AI-related initiatives. Namely, Trump is expected to repeal President Biden’s executive order that called on the federal government to establish wide-ranging oversight of AI development and then “dismantle” the AI safeguards Biden put in place.

Brookings also speculated that Trump is likely to instruct departments and agencies to take a similarly hands-off approach to AI regulation, strengthen AI-related export restrictions, and discontinue any engagement between the U.S. and China on managing AI risks.

ESG

In his first term as president, Trump moved quickly to scale back the efforts of previous administrations intended to address climate change and protect the environment. It stands to reason that come January 20, the new Trump administration will likely do the same to reverse President Biden’s measures on environmental, social and governance matters.

First up: the Securities and Exchange Commission’s rule issued in March 2024 that requires publicly traded companies to disclose their climate-related risks to investors. The regulations are currently on hold while the U.S. Court of Appeals for the Eighth Circuit considers challenges to the SEC rule. If the lawsuits are not heard in court prior to inauguration day, the new SEC chair will likely announce that the SEC will not “move forward” with the rule, which would render the lawsuits moot. However, if hearings do occur, the Trump administration is expected to rescind the climate disclosure rules entirely.

At the state level, lawmakers in California are making noise about pressing forward with implementing a rule to require large companies to disclose climate-related data. Other states, such as New York and Illinois, appear poised to join the fray with similar legislation.

Cybersecurity

The SEC Examination Division has said it will make cybersecurity one of its enforcement priorities in 2025. Areas of focus will include programs to safeguard investor information and assets. The division has also indicated it will keep a close eye on issues such as preventing data loss and protocols for responding to hacking and other cybercrimes. Of note, the division is warning registrants to also account for the cybersecurity practices of third-party service providers when doing their own risk assessments.

Cryptocurrency

The Examination Division also highlighted digital assets as one of its areas of interest this year. Specifically, the division has pointed to registrants’ compliance practices and information disclosures connected to cryptocurrency and related products.

Overall, though, the crypto sector’s substantial donations to Trump and GOP politicians have raised expectations that the industry will find a welcoming climate in Washington in 2025 and beyond. Crypto companies would likely appreciate some assistance from policymakers in mending fences with the banking industry at large.

Mergers & Acquisitions

Although 2024 turned out to be a disappointment to dealmakers, that hasn’t stopped speculation about an uptick in transactions this year. The factors boosting the market for mergers and acquisitions include expectations that the Trump administration will relax regulations on business and tamp down antitrust law enforcement. Meanwhile, a Republican trifecta in the executive and legislative branches increases the likelihood of passing a new round of corporate tax cuts, which would give deal-hungry companies more capital for M&A.

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So, will anything happen in 2025 that doesn’t involve Donald J. Trump? Absolutely. But we have the benefit of experience, having already experienced one Trump presidency, and the benefit of an individual who enjoys making his positions on key issues very well-known – even if his views aren’t always the most traditional. Some surprises, pleasant and otherwise, are surely in store for 2025, but for now, we’ll stick with what we know.