The start of 2025 marks a period of significant regulatory change for private fund managers. With a new administration in office, the financial regulatory landscape is evolving, bringing both opportunities and challenges. While shifts in SEC leadership and enforcement priorities may alter regulatory approaches, the need for strong compliance frameworks remains critical.
At Silver, we believe that regulatory uncertainty does not have to be a liability. Instead, firms that stay ahead of compliance changes can turn them into a competitive advantage. Those who view compliance as a core strategic function—not just a legal obligation—will be best positioned to navigate the evolving landscape. This guide breaks down the key regulatory developments private fund managers need to watch and provides actionable best practices to ensure firms remain compliant and resilient in the face of change.
Regulatory Uncertainty and Political Transition
A Republican administration typically signals an emphasis on reducing regulatory burdens and promoting business efficiency. However, past trends indicate that while enforcement priorities may shift, regulatory obligations persist. The transition to Acting SEC Chair Mark Uyeda and the potential appointment of Paul Atkins suggests a policy direction favoring reduced oversight. Nevertheless, private fund managers should remain vigilant.
Regardless of potential regulatory easing, private fund managers must maintain well-documented compliance programs. The SEC’s focus areas—including cybersecurity, digital assets, use of emerging technologies such as AI and investor disclosures—are expected to remain at the forefront of regulatory oversight. Firms should ensure their compliance frameworks are adaptable to both current and future regulatory expectations.
Moreover, the broader economic and political climate is likely to influence regulatory decision-making. With inflation concerns, global market volatility and ongoing geopolitical risks, the administration may take a more measured approach than anticipated. While reducing regulatory burdens may be a priority, increased scrutiny on risk management, investor protections and financial stability is expected to continue.
This Is Not a Period of Deregulation—Why Staying the Course Matters
This is not a period of deregulation, as some industry experts believe; rather, it is a time for private fund managers to remain diligent and stay the course. While certain regulatory policies may shift under the new administration, the fundamental need for strong compliance programs has not changed, and the majority of existing requirements and best practices are expected to remain intact. In fact, periods of regulatory transition often bring heightened uncertainty, requiring firms to be even more proactive in their compliance efforts.
The risk of regulatory complacency during transitions is high. Many firms may assume that a business-friendly administration will ease compliance burdens, but history has shown that regulatory agencies often adapt rather than retreat. The SEC’s ongoing focus on cybersecurity, digital assets, use of emerging technologies and investor protections suggests that regulatory oversight will continue, albeit with different priorities. Staying the course, maintaining a strong compliance culture and preparing for potential shifts will ensure that private fund managers remain ahead of the curve rather than reacting to changes after they occur.
Compliance Challenges: Form ADV and Recent Enforcement Trends
A recent SEC enforcement action against One Oak Capital Management LLC underscores the importance of compliance adherence. The firm was penalized for inadequate fee disclosures and failing to deliver Form ADV Part 2A to certain clients, breaching their fiduciary duty to clients and violating SEC disclosure requirements. This case highlights several key compliance considerations:
- Investor Transparency: Private fund managers must maintain clear and consistent disclosure practices, especially as it relates to fees and expenses.
- Timely and Accurate Filings: Ensuring Form ADV submissions and the delivery of the Form ADV Part 2 to clients and investors meet all SEC requirements is critical to avoiding enforcement actions.
- Internal Compliance Controls: Regular audits and staff training help prevent regulatory oversights and improve adherence to SEC standards.
- Leveraging Compliance Technology: Automated compliance tracking can reduce human error and enhance accuracy in reporting.
Beyond Form ADV compliance and fee disclosures, private fund managers should also pay close attention to conflicts of interest and marketing materials. SEC scrutiny of misleading performance claims and improper investor fee structures is expected to increase in 2025, reinforcing the need for transparency and accuracy in all communications.
The Future of Crypto Regulation
The SEC’s evolving stance on digital assets remains a significant area of interest for private fund managers. The Silver Compliance Team has been monitoring the digital asset space closely in order to advise clients on the shifting regulatory landscape in real time. Please see our previous thought leadership on this topic here.
In short, the formation of the Crypto Task Force and engagement with industry participants suggests a shift toward structured regulation and practical guidance rather than solely enforcement-driven oversight. Key regulatory developments to look forward to include:
- Security Status Clarification: Establishing whether certain digital assets qualify as securities.
- Custody Rules for Digital Assets: Defining compliant custody solutions for investment advisers handling cryptocurrency and digital assets.
- Regulatory Guidance on Crypto Lending and Staking: Addressing how these activities align with securities laws.
- Institutional Frameworks for Digital Asset Investments: Expanding pathways for traditional firms to enter the crypto market under regulatory guardrails.
- Enhanced Anti-Fraud Protections: Increased monitoring and enforcement against illicit crypto activities.
Additionally, discussions about merging the SEC and CFTC to streamline oversight have resurfaced. If implemented, such a merger could favor the CFTC’s regulatory approach, which is generally viewed as more accommodating to the digital asset industry. However, legislative and political challenges remain a barrier to immediate implementation.
Private fund managers engaged in digital assets should closely monitor regulatory shifts and proactively adjust compliance frameworks to align with emerging rules. Firms should also anticipate potential tax implications and cross-border regulatory coordination efforts, as global regulators continue working toward standardized crypto governance frameworks.
Cybersecurity, AI and Emerging Risks
As technology continues to reshape financial markets, regulators are increasing scrutiny of cybersecurity and AI-driven financial tools. The SEC’s new Cyber and Emerging Technologies Unit (CETU) reflects a heightened focus on cyber risks and technological innovations. The unit’s primary areas of oversight include:
- Cybersecurity Resilience: Ensuring firms implement robust security measures to protect client and investor data.
- AI in Compliance and Risk Management: Establishing regulatory standards for AI-driven investment strategies and risk assessment models.
- Blockchain and Digital Asset Regulation: Addressing the integration of blockchain technologies within traditional financial markets.
- Algorithmic Trading Oversight: Scrutinizing AI-driven trading systems for compliance with market fairness regulations.
- Data Privacy and Protection Standards: Strengthening disclosure requirements around data collection and usage.
Private fund managers must take proactive measures to mitigate cyber risks and ensure compliance with evolving SEC technology-related guidelines. Cybersecurity governance frameworks should be continuously assessed and firms must ensure they are prepared for potential cyber incident reporting requirements that may be introduced in future regulatory updates.
Best Practices for Private Fund Managers in 2025 and Beyond
To navigate these regulatory changes effectively, private fund managers should implement the following best practices:
- Maintain Comprehensive Compliance Programs
- Regularly update compliance manuals to reflect evolving regulations.
- Conduct internal audits and compliance reviews to identify and mitigate risks.
- Implement annual or semi-annual training programs to ensure staff awareness of regulatory obligations.
- Foster a culture of compliance by embedding regulatory awareness into daily operations.
- Strengthen Cybersecurity Measures
- Adopt advanced security protocols to protect sensitive client and investor information.
- Implement regular testing of your firm’s environment by ensuring ongoing monitoring through vulnerability scanning and penetration testing, as deemed necessary
- Conduct a comprehensive annual cybersecurity risk assessment.
- Ensure SEC-compliant disclosures regarding technology and cybersecurity risk management.
- Monitor third-party vendors for cybersecurity vulnerabilities.
- Engage with Regulatory Developments
- Participate in industry discussions, regulatory working groups and compliance forums.
- Monitor SEC policy updates and enforcement actions to anticipate regulatory shifts.
- Establish direct communication channels with legal and regulatory compliance experts to address regulatory concerns.
- Stay ahead of evolving AI and data privacy regulations that could impact operations.
- Enhance Documentation and Recordkeeping
- Maintain meticulous records of compliance activities and regulatory filings.
- Implement automated compliance tracking tools to ensure timely reporting and disclosure adherence.
- Document internal controls and risk mitigation measures for regulatory review purposes.
- Establish clear audit trails for financial reporting and investor communications.
- Develop a Global Compliance Strategy
- Align compliance programs with both U.S. and international regulatory requirements.
- Evaluate geopolitical risks that may impact cross-border investments.
- Work with legal and regulatory compliance advisors to navigate global regulatory challenges.
- Prepare for potential tax and jurisdictional reporting changes.
- Leverage Regulatory Technology Solutions
- Utilize AI-driven compliance tools for enhanced risk detection.
- Automate transaction monitoring and suspicious activity reporting.
- Implement blockchain solutions for secure, verifiable compliance reporting.
- Enhance investor communication through digital compliance dashboards.
Despite potential regulatory shifts under the new administration, private fund managers must remain proactive in compliance efforts. By maintaining strong internal controls, strengthening cybersecurity protocols and staying informed on regulatory developments, firms can effectively manage compliance risks while positioning for long-term success.
The evolving regulatory landscape presents both risks and opportunities and firms that approach compliance strategically will be well-positioned for growth. By embracing technological advancements, fostering a culture of compliance and engaging with regulators, private fund managers can ensure they remain ahead of the curve in 2025 and beyond.
At Silver, we provide strategic compliance solutions to help private fund managers navigate regulatory complexities with confidence. To learn more about how we can support your firm’s compliance needs, contact our Compliance Team today at [email protected].