The Trump Administration's Deregulatory Agenda Advances for Financial Services

Last week, the Trump Administration issued Executive Order 14405 (the Order or the EO) as part of its overall deregulatory initiative. Beginning with a series of broad executive orders in 2025 intended to curtail the prior Administration's regulatory agenda, the Trump Administration is now focusing on more targeted reforms that will have immediate effect for individual industries—especially financial services.

Key Takeaways

• A fintech-focused regulatory reset: The Order directs federal financial regulators to identify regulations, guidance, supervisory practices, and application processes that unnecessarily impede innovation, fintech-bank partnerships, and eligible fintech charter applications. It also directs them to encourage innovation, including in the area of digital assets.
• Federal Reserve payment access remains the hard part: The Order does not require the Federal Reserve Board to open payment accounts or payment services to uninsured depository institutions or nonbanks, but it asks the Federal Reserve Board to evaluate its legal authority, risk-management conditions, and legislative or regulatory paths to expand access.
• Part of a broader deregulatory push: The Order should be read in conjunction with recent efforts to make bank supervision more transparent, predictable, and less burdensome. These initiatives include changes involving reputation risk, supervisory principles, safety-and-soundness standards, and proposed CAMELS reform.

Overview and Purpose

The latest Executive Order 14405, "Integrating Financial Technology Innovation into Regulatory Frameworks," begins with a statement of policy that appears to be pro-growth and pro-innovation. It recognizes that the United States "is a global leader in financial innovation." The policy also notes that these "innovative services and solutions … enhance access to financial products and services and create economic opportunity for all Americans." The Order goes on to note that to foster such financial innovation "the federal government must update regulations to allow integration of digital assets and innovative technology into traditional financial services and payment systems." However, the EO observes that regulatory restraints must also be mitigated, such that the federal government "must also remove overly burdensome and fragmented regulations and supervisory practices that form barriers to entry and primarily benefit incumbent financial services firms."

Greater Specificity Compared to Prior Executive Orders

This focus is a departure from previous and more broadly worded executive orders because it concentrates on the established providers of financial services. According to the EO, complex and burdensome regulations have functioned as a barrier preventing competition. The Order indicates that reform is urgently needed to better "balance[e] innovation interests with the importance of safety and soundness, consumer and investor protection, market integrity, financial stability, and oversight."

Accordingly, the EO provides that government policy should be "to streamline regulatory processes, reduce unnecessary barriers to entry, and encourage collaboration between fintech firms, federally, regulated, financial institutions, and federal financial regulators." Thus, reducing barriers to entry for new entrants should be coupled with a slate of regulatory proposals as well as policies designed to ease regulation and supervision for incumbents.

Review of Burdensome Regulations

To achieve this deregulatory initiative, the EO mandates that within 90 days of the date of the Order, each federal financial regulator—except the Federal Reserve Board—must:

• Review existing regulations, guidance, supervisory practices, and application processes to identify those that could be updated—thus facilitating innovation and competition in financial products and services for small and emerging fintech firms
• Identify regulations and similar items that unduly impede fintech firms from entering into partnerships with federally regulated institutions
• Identify regulations and other items that could be amended to streamline application processes for eligible fintech firms seeking bank charters

And, within 180 days of the Order, the head of each federal financial regulator must, in consultation with the Assistant to the President for Economic Policy, take steps to encourage innovation suggested as a result of the review.

The Federal Reserve Board is notably not included within the definition of "federal financial regulator." But as detailed further below, there are provisions of the Order that are specific to it. The omission suggests a greater degree of independence for the Federal Reserve Board, notwithstanding an earlier EO and actions by this Administration. This shift may also reflect the delicate political relations between the Federal Reserve Board and the Trump Administration. Additionally, it accounts for the arrival of new chair Kevin Warsh and other key supervisory personnel appointed since 2025 who appear more aligned with the Administration's policy objectives. The difference in language and direction may also be a subtle acknowledgment that the Federal Reserve Board has concluded (and the Administration has tacitly accepted) that it is legally constrained from taking certain actions without Congressional action, or that it would not be prudent to do so without a formal framework to mitigate certain risks.

Review of Access to Federal Reserve Payment Services

The Order importantly mandates a review of access to Federal Reserve services, particularly including access to Reserve Bank payment accounts and payment services by uninsured depository institutions and non-bank financial companies. This evaluation includes entities engaged in digital assets and direct participation in real-time payment networks. Notably, this section of the EO, simply "requests" that the Federal Reserve Board complete a series of actions set forth below. The Federal Reserve Board is requested to conduct a comprehensive evaluation of the legal, regulatory, and policy framework covering access to payment accounts and payment services. Within 120 days of the Order, the board must submit a report to the President setting forth its options and recommendations. The evaluation is to assess:

• The legal authority of the Federal Reserve to extend direct access to Federal Reserve payment accounts and payment services to covered firms
• Options for expanding such access to the extent permitted by law subject to appropriate risk management requirements
• The legal impediments precluding direct access and a detailed analysis of those impediments, along with legislative regulatory options that would enable direct access
• Whether and to what extent each of the twelve Federal Reserve Banks has the legal authority to act independently of the Federal Reserve Board in granting or denying access to payment account and payment services

Shortly after the Order was issued, the Federal Reserve Board released a notice of proposed rulemaking on payment accounts, an expansion of its December 2025 request for information on a prototype model to reduce costs and increase payment speed. These prototype payment accounts would be similar to Master Accounts but would not pay interest on balances at Reserve Banks or have access to intraday credit, among other limitations. The proposal seeks to provide a tailored option to support innovation by serving the clearing and settlement needs of certain eligible institutions while also mitigating material risks to the Reserve Banks and payment system. Until the Board has completed its policy development process on the payment account proposal, the Board has asked Reserve Banks to pause their review of Tier 3 institutions applying for Master Accounts—the same kinds of uninsured institutions that would benefit from the proposed payment accounts.

Consistency with Other Recent Regulatory Action

Notably, this most recent Order can be viewed as part of a series of actions being undertaken inside and outside the Federal Reserve System to make bank supervision more transparent, more predictable, and less burdensome to those who are regulated. Recent examples would be the October 7, 2025, proposed rule by the FDIC and the OCC defining and clarifying safety and soundness; the April 20, 2026, final rule prohibiting the use of reputation risk in bank examinations; the April 21, 2026, "Updated Statement of Supervisory Operating Principles" by Randall Guynn, the Director of the Division of Supervision and Regulation; and the May 19, 2026, release by the Federal Financial Institutions Examination Council (FFIEC) requesting comments on the reform of the long outdated CAMELS rating system (with a suggested de-emphasis on the "M" [Management] element, among other changes), which has been prioritized by the FFIEC Chair and Federal Reserve Board Vice Chair for Supervision, Michelle Bowman.

Consistency with Prior Executive Orders

This Order is also only the latest in a series of executive orders from the second Trump Administration intended to cabin and reform the administrative state. Taken together, they amount to the most far-reaching regulatory reorientation in many years, surpassing even those of the Reagan Administration. Additional examples from this Administration include:

• Executive Order 14192 ("Unleashing Prosperity Through Deregulation"), January 31, 2025, began by noting that "[t]he ever-expanding morass of complicated Federal regulation imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness." Thus, it was declared to be the policy of the Trump Administration "to significantly reduce the private expenditures required to comply with federal regulations to secure America's economic, prosperity, and national security, and the highest possible quality of life for each citizen."
• The Administration has not left the execution of its agenda to the regulators themselves. On February 18, 2025, Executive Order 14215 ("Ensuring Accountability for All Agencies") was promulgated in which the White House noted that it was the "policy of the executive branch to ensure Presidential supervision and control of the entire executive branch" including, in a break from the past, submission by independent agencies for review of all proposed and final significant regulations to the Office of Information and Regulatory Affairs (OIRA).
• And, on January 20, 2025, Executive Order 14148 ("Initial Rescissions of Harmful Executive Orders and Actions"), revived Executive Orders from the first Trump Administration such as Executive Order 13777 ("Enforcing the Regulatory Reform Agenda") and Executive Order 13892 ("Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication") which, among other things, required the appointment of Regulatory Reform Officers and Regulatory Reform Task Forces in each agency (EO 13777) and, in EO 13892, further noted that "agencies shall afford regulated parties the safeguards described in this order, above and beyond those that the courts have interpreted the due process clause of the Fifth Amendment of the Constitution to impose."

Our Take

The second Trump Administration has argued that excessive regulation was holding back U.S. economic growth and innovation. As a result, it has steadily removed these barriers, including those affecting the financial services industry.

Fintechs, digital assets companies, and tech companies that work with banks and others in the financial services ecosystem have benefited from these changes, especially those offering novel and more modern products and services. The Administration has concluded that consistent with safety, soundness, and overall security, it will foster innovation and assist new entrants and others engaged in novel financial activities in contributing to the overall growth and competitiveness of the U.S. economy. In addition, we expect this push will continue interest in new charters, the modernization of the U.S. payments system, and the development of the meaning and interpretations of seemingly staid concepts like the "business of banking," "data processing." This push is also expected to loosen regulatory frameworks and expand incidental powers granted to financial institutions

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Steve Gannon, Max Bonici, and Andy Lorentz are partners in DWT's Washington, D.C. office. For questions or more insights, please reach out to the authors or another member of our financial services team and sign up for our alerts.