On May 19, President Trump issued an executive order directing federal financial regulators to review regulations, supervisory practices, and application processes affecting fintech firms and their partnerships with regulated financial institutions. The order states that existing regulatory frameworks may create unnecessary barriers to entry for fintech companies and directs agencies to identify opportunities to streamline oversight while maintaining safety and soundness, consumer protection, and financial stability considerations.
The executive order broadly defines “fintech firms” to include nonbank companies that use technology to provide or support financial products and services, including payments, lending, brokerage activities, custodial services, and digital asset-related activities. Specifically, the order:
- Requires agency-wide regulatory reviews. Federal financial regulators, including the CFPB, OCC, FDIC, SEC, CFTC, and NCUA, must review existing regulations, guidance, supervisory practices, and application processes within 90 days to identify measures that may impede innovation or competition for fintech firms.
- Targets fintech-bank partnership barriers. The reviews must identify regulations, guidance documents, supervisory practices, and other agency actions that may unnecessarily restrict partnerships between fintech firms and federally regulated financial institutions.
- Calls for streamlined chartering and licensing processes. The order directs agencies to identify ways to simplify application processes for fintech firms seeking bank charters, credit union charters, deposit insurance, or other federal authorizations.
- Requests a Federal Reserve review of payment system access. The order requests that the Federal Reserve evaluate whether uninsured depository institutions and nonbank financial companies, including digital asset firms, may obtain direct access to Federal Reserve payment accounts and payment services, including participation in instant payment systems.
- Encourages transparent application procedures. If the Federal Reserve determines that current law permits broader access to Reserve Bank payment services, the order requests that the agency establish transparent application procedures and process completed applications within 90 days.
Putting It Into Practice: The executive order signals a federal focus on reducing regulatory barriers for fintech firms and expanding potential access to traditional financial infrastructure, financial institutions, fintech firms, and digital asset companies should monitor agency responses closely, particularly as regulators begin reviewing supervisory practices, chartering processes, and payment system access frameworks over the coming months.