Integrating Financial Technology Innovation Into Regulatory Frameworks

What it does

• •Directs federal financial regulators to review existing regulations, guidance, and supervisory practices within 90 days to identify rules that impede fintech firm innovation and partnerships with federally regulated institutions.
• •Requires federal financial regulators to take steps within 180 days to encourage innovation based on their reviews, while balancing innovation with safety, consumer protection, and financial stability.
• •Requests the Federal Reserve Board to evaluate its legal authority to grant direct access to Reserve Bank payment accounts and services to uninsured depository institutions and non-bank financial companies, and to submit findings and recommendations within 120 days.
• •Requests the Federal Reserve Board to establish transparent application procedures for direct Federal Reserve access and make determinations on complete applications within 90 days, if existing law permits such access.

Why it matters

• •The order aims to remove regulatory barriers it characterizes as fragmented and overly burdensome that favor incumbent firms, with the stated goal of enhancing access to financial products and services for consumers.
• •Direct access to Federal Reserve payment systems could enable fintech firms and other non-traditional entities to participate in payment networks without intermediaries, potentially reshaping the financial services infrastructure.

Who is affected

• •Fintech firms (non-bank companies using technology to offer financial products or services, including digital asset and blockchain-based services).
• •Federal financial regulators (Consumer Financial Protection Bureau, Securities and Exchange Commission, National Credit Union Administration, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and the Federal Reserve Board).
• •Federally regulated financial institutions (banks, credit unions, broker-dealers, investment advisers, and futures commission merchants) that may partner with fintech firms.

What happens next

The order takes effect immediately; federal regulators must complete initial reviews within 90 days and report on actions taken within 180 days, while the Federal Reserve Board must submit a comprehensive evaluation report within 120 days.