US President Donald Trump signed an executive order on Tuesday directing a comprehensive review of barriers preventing fintech and cryptocurrency firms from accessing Federal Reserve payment systems and banking partnerships. The order requires the Federal Reserve Board to evaluate the legal, regulatory, and policy framework governing fintech and crypto firms' access to Federal Reserve payment systems and submit a report within 120 days. The move addresses longstanding friction fintech firms have faced in accessing banking services, including debanking incidents where companies lost access to banking rails. According to the executive order, Trump stated: "The United States is a global leader in financial innovation, driven in part by the rapid growth of financial technology and fintech firms. 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."
Federal Reserve Review Mandate
The Federal Reserve governors have been tasked with assessing the Federal Reserve's legal authority to grant direct access to fintech and crypto firms. They are also asked to explore "options for expanding such access to the extent permitted by law, subject to appropriate risk management requirements." Access to Federal Reserve payment systems provides direct access to core banking infrastructure, enabling more efficient money movement and reducing dependence on intermediary banks.
Banking Partnership Barriers Review
Over the next 90 days, the heads of each US federal financial regulator are required to review regulations, orders, and no-action letters that may prevent fintech firms from entering into partnerships with federally regulated institutions such as credit unions, broker-dealers, and investment advisers. Regulators must also examine existing regulations, guidance, supervisory practices, and application processes to identify items that could be updated "to facilitate innovation."
Streamlined Charter Applications
Federal financial regulators are also directed to review regulations, guidance documents, orders, and no-action letters that could be amended to streamline applications for eligible fintech firms seeking bank charters, credit union charters, deposit or share insurance, and other federal licenses. In December, the Office of the Comptroller of the Currency conditionally approved five applications for crypto-related national trust banks: First National Digital Currency Bank, Ripple, BitGo, Fidelity Digital Assets, and Paxos.
