Key Takeaways
- Trump’s executive order requires regulators to review fintech and digital asset oversight rules.
- Federal agencies must identify barriers limiting fintech partnerships, charter reviews, licensing, and other federal authorizations for eligible firms.
- Regulatory changes could affect charter approvals, licensing reviews, and Federal Reserve payment system access.
Trump Order Targets Digital Asset Access to Payment Rails
President Donald Trump issued an executive order on May 19 directing federal financial regulators to review rules affecting fintech firms, digital asset companies, and blockchain-based financial services. The order calls for updated regulations that allow digital assets and new financial technology to integrate into traditional financial services and payment systems while reducing barriers that limit competition.
The order defines fintech firms as non-bank companies using technology to offer or support financial products or services. Covered activities include payment processing, lending, digital banking, securities and commodities market activity, blockchain-based services, and digital asset-related services. Federal financial regulators must review rules, guidance, supervisory practices, orders, no-action letters, and application processes within 90 days.
The order states:
“To foster this financial innovation, the Federal Government must update regulations to allow integration of digital assets and innovative technology into traditional financial services and payment systems.”
Reviews must identify barriers that limit fintech partnerships with banks, credit unions, broker-dealers, investment advisers, and futures commission merchants. Agencies also must examine charter applications, deposit or share insurance requests, licensing processes, and other federal authorizations for eligible fintech firms.
Federal Reserve Review Focuses on Payment System Access
The Federal Reserve is requested to evaluate whether uninsured depository institutions and non-bank financial companies can access Reserve Bank payment accounts and payment services. The review explicitly includes firms involved in digital assets, novel financial activities, and instant payment networks.
The order directs the Federal Reserve to assess legal authority, possible access expansion, legal impediments, risk controls, and the role of the 12 Federal Reserve Banks. It also asks whether regional Reserve Banks may act independently when granting or denying access applications. The order states:
“The Federal Government must also remove overly burdensome and fragmented regulations and supervisory practices that form barriers to entry and primarily benefit incumbent financial services firms.”
Custodia Bank founder and CEO Caitlin Long emphasized on X: “Thank you, @POTUS, for recognizing that there is a continuing problem at the Federal Reserve with blocking legally-eligible institutions from access to the US payment system, which is a public good.”
When existing law permits access, the Federal Reserve is requested to establish transparent application procedures and issue determinations on complete applications within 90 days. The order says implementation must remain consistent with applicable law, available appropriations, and existing agency authority.