Executive Order Integrates Fintech into US Regulation
A new executive order aims to integrate fintech innovation into US regulatory frameworks, potentially granting non-bank fintech companies direct access to Federal Reserve payment systems.
A recent Executive Order, signed on May 19, 2026, by President Donald Trump, signals a significant shift in the United States' approach to financial technology (fintech) regulation. Titled "Integrating Financial Technology Innovation Into Regulatory Frameworks," the order seeks to streamline regulations, reduce barriers to entry for fintech firms, and foster collaboration between fintech companies and traditional financial institutions. This directive could pave the way for non-bank fintech companies to gain direct access to Federal Reserve payment systems.
The Executive Order emphasizes updating regulations to integrate digital assets and innovative technologies into traditional financial services and payment systems. It criticizes existing "overly burdensome and fragmented regulations" that may hinder innovation and disproportionately benefit incumbent financial services firms. Federal financial regulators, excluding the Federal Reserve Board, are directed to review current regulations, guidance, and application processes within 90 days to identify areas for modernization. Within 180 days, these regulators are expected to take concrete steps to encourage innovation based on their findings.
A key aspect of the order is its request for the Federal Reserve Board to conduct a comprehensive evaluation of the framework governing access to its payment accounts and services for uninsured depository institutions and non-bank financial companies, including those involved in digital assets. This evaluation will assess the Federal Reserve's legal authority to expand such access, identify any legal impediments, and propose legislative or regulatory changes if necessary. The Federal Reserve is tasked with submitting a report on its findings within 120 days and establishing transparent application procedures with 90-day decision timelines if direct access is deemed permissible under existing law.
In a related development, the Federal Reserve Board issued a proposal on May 20, 2026, to establish a limited-purpose "Payment Account." This "skinny" account aims to provide eligible financial institutions, including fintechs and crypto firms, with direct access to certain Fed payment services like Fedwire Funds Service, FedNow Service, and the National Settlement Service, for clearing and settling payments. This move is intended to support private-sector innovation while prudently managing risks. While the Executive Order is forward-looking and contemplates broader access for non-bank financial companies, the Federal Reserve's proposal primarily streamlines the application process for institutions already legally eligible for Reserve Bank accounts.
For informational purposes only. Not investment advice.
Source: BRZ News research desk. Disclaimer: For informational and educational purposes only and does not constitute financial, investment, or trading advice.