President Trump’s May 19 Executive Order (EO) 14405 continued his administration’s enabling approach for fintech and digital asset firms. The EO, titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” begins with the predictable premise that the US must maintain leadership in financial innovation. It then calls for financial regulators to identify opportunities to eliminate existing regulatory barriers to the growth of fintech and digital asset firms, thereby extending a softened regulatory perimeter to a host of new financial services players. While the EO is facially promising for a host of fintech and digital asset operators, regulators’ ability to execute on the directive will be constrained by existing statutory constraints, opposition from the banking industry, and a polarized, slow-moving Congress where legislative reform is required.
For example, the Federal Reserve Act (FRA), partially informed by banking definitions in the Federal Deposit Insurance Act (FDIA), outlines the range of institutions eligible for direct access to Federal Reserve (the Fed) accounts and services. Under the statute, access to so-called “master accounts”—which provide eligible financial institutions with the ability to hold reserves directly with the Fed, access to key payment rails like Fedwire and FedNow, and access to lending facilities like the Discount Window—and newly developed “payment accounts”—which would provide eligible institutions with a narrower suite of such services—are limited to depository institutions. The Fed has long maintained a three-tier structure for reviewing and approving master account requests, and less-traditional entities face heightened scrutiny. While the EO “requests” that the Fed review its criteria for granting fintechs and digital asset firms access to newly proposed payment accounts, the Fed remains hamstrung by existing statute. In fact, in its May 20th release outlining the proposed payment accounts, released only a day after the EO was issued, the Fed highlighted statutory limits on payment account access, stating that “federal law—as enacted by Congress—dictates the entities that are eligible to maintain an account at a Reserve Bank.”
EO 14405 also calls for financial regulators to review and potentially amend rules related to fintech and non-traditional financial organizations’ access to bank charters. By promoting broader access to bank charters, the EO hopes to address existing statutory barriers that limit eligible institutions’ access to Federal Reserve accounts and services. Depending on the type of bank charter, fintechs and digital asset players can, in theory, become eligible under existing law. However, the scope of the eligibility is likely to vary by charter type. As we’ve written elsewhere, digital asset players are currently pursuing non-depository trust bank charters at a torrid pace, and the OCC is approving them nearly as rapidly. Fintech operators and digital asset players might think hard about pursuing such a charter while they’re still available, as we expect a Democratic administration in 2029 to be much less friendly.
However, it remains unclear whether these non-depository institutions meet statutory eligibility requirements. More traditional fintech and digital asset firm bank partnership models could theoretically support access to such payment accounts through a bank intermediary, but that model is less attractive given reliance on bank partners.
The EO and payment account guidelines are sure to face opposition from the traditional banking lobby, which sees the administration as both eroding the industry’s competitive moat and enabling potentially risky financial actors. Adding insult to injury, the EO pushing for regulatory enablement of banking competitors was paired with another EO that attempts to co-opt banks as financial enforcers of the administration’s immigration policies. Though softened relative to rumored versions, EO 14406 calls on banks to strengthen their compliance programs to be “attentive to the credit risks” posed by undocumented immigrants. It calls on the CFPB to consider modifications of ability-to-repay rules under the Truth in Lending Act. The EO also directs the Department of the Treasury to develop an advisory focused on “risks associated” with the “non-work-authorized” population’s use of the financial system and to eventually propose changes to the Bank Secrecy Act that strengthen customer identification programs, potentially reducing banking access for such populations.
The administration’s push to clarify and soften the regulatory environment for fintech and digital asset players will continue, but it increasingly clashes with existing federal statutes and the interests of the banking industry. While we expect regulators to remain responsive to the administration’s efforts in financial innovation, we do not expect a polarized and time-pressured Congress to take up the president’s entire agenda and reform the Federal Reserve Act to enable a dramatic expansion of access to Fed accounts and services. While the banks have been appreciative of the administration’s relaxed capital proposals and rulemaking approach, the White House’s push to empower competitors under relaxed regulatory standards is sure to invite backlash.
Read more of Capstone’s financial services coverage:
Insurers’ Increasing Exposure to Private Credit Attracts Regulators’ Scrutiny
The Deregulatory Pendulum Swing: Life after a Neutered Consumer Financial Protection Bureau
Banking on Ease: How the Regulatory Burden on Banks Will Lessen in 2026
