President Orders Financial Regulators to Enable Fintech Firms

President Trump issued an Executive Order ("EO") (i) directing federal financial regulators to review and streamline rules, guidance, and licensing processes that impede financial technology firms, and (ii) requesting the Federal Reserve ("Fed") to evaluate whether non-bank and uninsured firms can gain direct access to Reserve Bank payment accounts and services.

In the EO, titled "Integrating Financial Technology Innovation into Regulatory Frameworks," the President stated that the federal government must remove overly burdensome and fragmented regulations that create barriers to entry and that primarily benefit incumbent financial services firms.

The EO sets the follownig schedule: within 90 days, the head of each federal financial regulator must review existing regulations, guidance, supervisory practices, and application processes so as to identify two categories of items: (i) provisions that keep fintech firms from partnering with federally regulated institutions, such as insured depository institutions, credit unions, broker-dealers, investment advisers, and futures commission merchants, and (ii) provisions that could be amended to ease applications by fintech firms seeking bank or credit union charters, deposit or share insurance, and other federal licenses. Within 180 days, each regulator must take steps to encourage innovation based on the review.

The EO also asked the Fed to evaluate the framework that governs which firms can access Reserve Bank payment accounts and services. The EO said the evaluation should cover uninsured depository institutions and non-bank financial companies, including firms engaged in digital assets. The President asked the Fed to report its findings and recommendations within 120 days. Further, the President asked the Fed to assess its legal authority to extend direct access, options for expanding it, legal impediments, and whether each of the 12 Federal Reserve Banks may act independently of the Board in granting or denying access. If the Fed finds that existing law permits direct access, the President requests the Fed establish transparent application procedures and decide complete applications within 90 days.

A companion White House fact sheet accompanied the EO.