President Trump Issues Executive Order on Fintech Innovation, While FRB Proposes Payment Accounts

President Trump has issued a landmark executive order aimed at integrating digital asset providers and financial technology firms into the traditional U.S. financial system by modernizing regulatory frameworks. In a coordinated move, the Federal Reserve Board has proposed the creation of limited-purpose "Payment Accounts" to provide eligible non-bank financial institutions and uninsured depositories with access to core payment infrastructure. These developments signal a major shift toward accommodating fintech innovation and competition within the regulated banking sector while maintaining systemic stability.

On May 19, 2026, President Trump signed the "Integrating Financial Technology Innovation Into Regulatory Frameworks" executive order, which mandates that federal financial regulators review and update regulations described as "relics" of the brick-and-mortar era. The order requires agency heads to identify and remove barriers that unduly impede fintech firms from partnering with federally regulated institutions or obtaining bank charters, credit union charters, and other federal licenses. Regulators are directed to complete these reviews within 90 days and implement steps to encourage innovation within 180 days, ensuring a balance between market competition and the maintenance of safety, soundness, and investor protection.

The executive order places specific emphasis on the Federal Reserve Board (FRB), requesting a comprehensive review of the frameworks governing access to Reserve Bank payment accounts for uninsured depository institutions and non-bank financial companies. The order explicitly names companies engaged in digital assets and real-time payment networks as primary candidates for this expanded access. If the FRB determines such access is legally permissible, it is requested to establish transparent application procedures and commit to making determinations on complete applications within a 90-day window. Furthermore, the FRB must evaluate the legal authority of the 12 regional Federal Reserve Banks to act independently in granting account access to ensure that all applicants are evaluated on a consistent, system-wide basis.

In response to these directives, the FRB issued a proposal on May 20, 2026, to establish specialized "Payment Accounts" designed for clearing and settling activity via the Fedwire Funds Service, the FedNow Service, and the National Settlement Service. These accounts are specifically intended for Tier 2 and Tier 3 institutions, which include non-federally insured entities that often present more heterogeneous risks. To mitigate these risks, the FRB proposal includes strict ex ante controls: account holders would be barred from accessing the discount window or intraday credit, and any transaction resulting in an overdraft would be automatically rejected. Additionally, the FRB has proposed excluding these accounts from the ACH network due to the complexity of managing credit risks in a deferred-settlement environment.

The FRB's proposal follows a series of 2025 speeches by Governor Waller and a December 2025 request for information regarding "skinny master accounts." While the proposal does not expand statutory eligibility for Federal Reserve access, it seeks to operationalize a pathway for eligible fintechs to utilize central bank infrastructure by the fourth quarter of 2026. This move is intended to support private-sector innovation in payments while ensuring that the Federal Reserve can prudently manage the risks associated with non-traditional financial participants. The FRB is expected to submit a formal report to the President within 120 days detailing its findings and recommendations for further expanding infrastructure access.