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Apr. 03, 2025

A second Trump administration could bring “a recalibration of priorities” to U.S. financial regulation, says Jessica Wachter, former Chief Economist at the Securities and Exchange Commission (SEC). In an interview with SHoF, she discusses expected shifts in crypto policy, the future of climate disclosures, and the role of economic research in rulemaking.

Jessica Wachter (Wharton School of Business) says a second Trump administration would shift regulation toward capital formation and competition, easing the agency’s focus on investor protection.

“Under a second Trump administration, I expect a recalibration of priorities,” Wachter said in an interview with SHoF. She added that crypto regulation could face significant changes.

“Several Commissioners have already signaled a desire to change course — including potentially ending certain ongoing litigations,” Wachter explained, adding that she would expect clearer compliance rules and potential temporary relief for crypto firms. Enforcement would likely focus more narrowly on clear fraud rather than broader regulatory violations, she said.

As head of the SEC’s Division of Economic and Risk Analysis (DERA), Wachter oversaw nearly 200 staff, including 90 PhD economists. Her team “supported over 100 rule proposals and adoptions,” from bolstering money market fund resilience to advancing central clearing in the Treasury market.

Deregulation Risks and Rewards

A renewed push for deregulation could target reporting burdens on public companies.

“The Commission has already signaled interest in re-examining the incentive structure that encourages firms to remain private, with the goal of potentially easing the costs and complexities associated with going — or staying — public,” Wachter said.

“Reducing overly burdensome regulations could lower costs for issuers, expand investment opportunities, and promote capital formation — which can ultimately benefit investors through increased access and innovation,” she said, adding that there are also tradeoffs:

“Loosening disclosure requirements or weakening oversight could reduce transparency and investor protections, particularly for retail investors. This might create more room for misconduct or make it harder for investors to assess risks, especially in fast-moving sectors like fintech and crypto.”

Future of Climate Disclosures

The SEC’s 2024 climate disclosure rule remains in limbo after legal challenges paused its rollout.

“While I was at the SEC, the Commission voted to stay the climate disclosure rule in response to a legal challenge, effectively pausing its implementation, which had been scheduled to begin in 2026,” Wachter said. “Notably, the Commission recently announced it would not defend the rule in court — an unusual move.”

Despite that, she expects companies to continue disclosing climate risks.

“Many companies already disclose climate risks voluntarily. California and the EU are implementing mandatory regimes,” she noted. “So even if the SEC rule is ultimately withdrawn, climate-related disclosures will likely continue — but without a standardized framework, the disclosures may remain fragmented and difficult for investors to interpret.”

Research Essential to Policy

Wachter underscored the value of research and data-driven policymaking:

“There were many rules that literally could not have been written without economic analysis.”

Much of the SEC’s work is nonpartisan and continues regardless of political leadership, Wachter said.

“The role of economists within DERA is to provide the Commission with objective, high- quality economic analysis,” she said. “However, it’s up to the Commission — whose members are confirmed by Congress — to weigh that analysis and make decisions.”