Regulatory Overload Hits Financial Firms as Interpreting New Rules Becomes a Major Headache

The financial services industry is experiencing three significant shifts in regulation, according to CUBE's latest report. First, risk and compliance teams are being asked to interpret regulatory changes before they are finalised, often without clear guidance from authorities.

CUBE's Cost of Compliance Report 2025 found that at 74% of institutions, it takes over a year to move from identifying a regulatory change to full implementation. This is due to an analytical workload that has outgrown teams' capacity to absorb it.

The consequences of misinterpreting regulatory changes are already being felt. In the US, SEC commissioner Hester Peirce warned that crypto vaults and onchain lending arrangements could fall under federal securities law depending on their structure.

CUBE also notes a second shift: regulated firms are setting internal AI governance standards stricter than current rules demand, including sign-off requirements before AI touches sensitive data. This is happening despite the formal timeline for implementing these regulations being pushed back to December 2027 in the EU.