President Donald Trump signed an executive order on May 19 directing the Federal Reserve to review policies governing fintech companies’ access to payment accounts and services.
In his order, Trump said the government must remove burdensome regulatory barriers to enable integration of digital assets and financial technology into “traditional financial services and payment systems.”
“This order will help cement the United States as the world leader in financial technology innovation, which will help drive down costs and create greater economic opportunities for hardworking Americans,” the White House said in a fact sheet.
Trump’s order requires financial regulators to review existing regulations that could be updated to promote fintech innovation and identify rules that “unduly impede fintech firms from entering into partnerships with federally regulated institutions.”
Financial regulators are instructed to take steps within 180 days of the order’s issuance to promote innovations based on the review, according to the president’s order.
The order requires the Federal Reserve to assess its legal authority to provide companies with direct access to payment accounts and services, and to explore options to expand that access to fintech companies.
Trump also asked the regulator to evaluate whether the 12 Federal Reserve banks have legal authority to independently decide whether to grant or deny access to payment accounts and services, according to the order.
Penny Lee, president and CEO of the Financial Technology Association, backed Trump’s order in a May 19 statement, calling it “a win” for Americans who rely on fintech products to pay bills and manage their finances.
“By directing federal agencies to find ways to expand access to financial technology tools, this Administration is taking meaningful steps to modernize our financial system and put consumers and small businesses first,” Lee said. “We look forward to working with the Administration to turn this commitment into real policy progress.”
In March, the Federal Reserve granted the cryptocurrency exchange Kraken a master account, making it the first U.S. digital asset bank with direct access to the Fed’s payment infrastructure.
The Federal Reserve master account gives the company direct access to U.S. payment rails, including Fedwire, without relying on intermediary banks.
“This milestone marks the convergence of crypto infrastructure and sovereign financial rails. With a Federal Reserve master account, we can operate not as a peripheral participant in the U.S. banking system, but as a directly connected financial institution,” Kraken co-CEO Arjun Sethi said in a March 4 blog post.
The company said the Fed’s approval came after more than five years of regulatory engagement, extensive examination, and operational scrutiny.