- Key insight: One of the two bank-focused executive orders issued by the White House on Tuesday addressed access to Fed master payment accounts for fintechs.
- Expert quote: "We don't expect that the order will be ignored by incoming Fed Chair Kevin Warsh." - Capital Alpha Partners' Ian Katz
- Forward look. The order requested that the Federal Reserve complete its evaluation within 120 days.
President Donald Trump issued an executive order on Tuesday evening instructing federal bank regulators and the Federal Reserve to review and "streamline" their fintech regulations.
As the current administration has consistently signaled a fintech-friendly regulatory approach over the past year or so, the executive order further establishes Trump's interest in incorporating fintechs and digital asset companies into the American financial system.
The order directed the Fed to, within the next 120 days, "conduct a comprehensive evaluation of the legal, regulatory, and policy framework governing access to Reserve Bank payment accounts and payment services by uninsured depository institutions and non-bank financial companies, including those engaged in digital assets and other novel financial activities."
The order specified that the evaluation should include an assessment of "the legal authority of the Federal Reserve to extend direct access to Federal Reserve payment accounts and payment services to covered firms" and "options for expanding such access to the extent permitted by law, subject to appropriate risk management requirements."
It is unclear whether the executive order applies to traditional Federal Reserve master payment accounts or the
"On one hand, we don't think the executive order will make a huge difference, because it's a request of the Fed more than an order," Ian Katz, managing partner at Capital Alpha Partners, wrote in an analyst research note. "The Fed has already been moving in the direction the administration wants, with the Kansas City Fed approving a 'limited purpose account' in March for
The executive order demonstrates the administration's willingness or eagerness to try to push the Fed to support policy objectives, according to Katz.
"We don't expect that the order will be ignored by incoming Fed Chair Kevin Warsh, who will be
Industry trade groups had mixed responses to Trump's executive order.
"Policymakers must recognize the significant gaps in regulation, supervision, and resolution between banks and nonbanks and ensure like activities are subject to like regulation," Independent Community Bankers of America (ICBA) president and CEO Rebeca Romero Rainey said in a statement on Tuesday. "Policymakers should pause new policies on stablecoins, Federal Reserve master accounts, and OCC national trust charters and holistically assess their combined impact on local communities and the broader economy."
ICBA and community bankers are reviewing the executive order "to ensure U.S. policies on special-purpose depository institutions and digital assets appropriately address the risks they pose to consumers and our financial system," she said.
Conversely, the Financial Technology Association (FTA) welcomed the executive order as "a win for the millions of Americans who rely on fintech products every day to pay bills, manage their money and access financial services."
"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," said FTA president and CEO Penny Lee. "The U.S. has long been home to the most innovative financial companies in the world. This order helps ensure that those innovations actually reach the people who need them most, including those left behind by traditional institutions."
