US President Donald Trump issued an executive order on May 19 directing federal financial regulators to review regulations governing fintech companies, digital assets, and blockchain-based financial services.
The order aims to update regulations so that digital assets and new financial technologies can be integrated into traditional financial systems and payment networks, while reducing barriers that limit competition in the financial sector.
Under the order, fintech companies are defined as non-bank companies that use technology to offer or support financial products and services.
Activities involved include payment processing, lending, digital banking, securities and commodities market activities, blockchain services, and digital asset-related services.
All federal financial regulators are directed to review their regulations, guidance, supervisory practices, approval letters, and application processes within 90 days.
According to the order, the federal government must update regulations to enable the integration of digital assets and innovative technologies into traditional financial and payment systems.
The review also examines barriers that constrain cooperation between fintech companies and banks, credit unions, broker-dealers, investment advisors and futures traders.
In addition, relevant agencies are also asked to review applications for licenses, deposit insurance and other federal approvals for eligible fintech companies.
At the same time, the Federal Reserve is asked to assess whether uninsured depository institutions and non-bank financial companies can be granted access to the Reserve Bank's payment accounts and payment services.
The assessment involves companies related to digital assets, new financial activities and instant payment networks.
The order also directs the Federal Reserve to review the legal authority, potential for expanding access, regulatory barriers, risk controls and the role of the 12 regional Reserve Banks in approving or denying access applications.
It also emphasizes that the government should eliminate regulations and supervisory practices that are considered burdensome and prevent new players from entering the financial industry.
Founder and CEO of Custodia Bank, Caitlin Long welcomed the move and said that there are still problems within the Federal Reserve that prevent eligible institutions from gaining access to the US payment system.
The order further states that, if permitted under existing law, the Federal Reserve must establish a transparent application procedure and make a decision on complete applications within 90 days.
