The White House is pressing federal financial regulators to take a fresh look at the rules shaping how FinTechs work with banks, payment systems and the broader financial services sector.
President Trump signed an executive order on Tuesday (May 19) Directing federal regulators to review existing regulations, guidance, supervisory practices, and submission processes that could be updated to encourage financial innovation and competition, while maintaining safety and soundness, according to a White House fact sheet.
The order is aimed at the regulatory plumbing behind modern financial services. It calls on federal regulators to identify rules that can be changed to support the growth of fintech companies and federally regulated financial institutions of all sizes. It also requires the Federal Reserve to evaluate the legal and policy framework governing access to Reserve Bank payment accounts and payment services by uninsured depository institutions and nonbank financial companies.
This piece could attract close attention from payments companies. Direct or expanded access to the Fed’s payment services has long been a major issue for non-bank fintech companies, which often rely on banks to connect to the underlying payment rails. The White House fact sheet says the Fed should report on its legal authority to expand that access, options for expanding access with risk controls, and any legal barriers that may require legislative or regulatory changes.
The order also positions third-party risk management and legacy financial rules as areas that may need to be updated as more banking, payments, brokerage, securities and custody services move through digital channels.
“Financial regulations, guidance, and other policies are relics of a time when financial services were mostly provided in brick-and-mortar settings and should be updated to reflect the modern era, the digital economy, and the benefits that technology can provide to all Americans, including lowering the costs of financial services,” the White House said in a fact sheet.
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PYMNTS has tracked how regulation, digital assets, and payment rails are converging across financial services. Recent coverage covered what the White House cryptocurrency report said Stablecoins can help maintain the dollar’s control And how did the Senate pass the GENIUS Act? Stablecoin regulation is closer to becoming federal law. PYMNTS has also reported on how banks are handling… The digital asset boom and regulatory transformation As cryptocurrencies, stablecoins and the modernization of payments move into the mainstream of finance.
