Introduction

For the fintech industry, 2025 was a volatile year filled with a mix of uncertainty and opportunity. Federal priorities shifted overnight to a sweeping deregulatory agenda: enforcement was largely shut down, the Biden administration’s focus on addressing redlining and other discriminatory practices was cancelled, and the new administration openly embraced digital currencies as a viable financial product. However, perceiving a regulatory void, several states jumpstarted their own initiatives to counter federal deregulation, while the absence of the Chevron deference framework has also led to courts taking on technical questions of statutory interpretation typically reserved for professional regulators, leaving fintechs and other regulated companies with arguably less certainty than ever. 

Another defining aspect of 2025 was the artificial intelligence (AI) boom that continues to drive automation and new product innovations, from sophisticated underwriting models, to generative output, agentic functions and fraud prevention, among other things. AI continues to permeate the entire fintech industry. 

As we discuss in this article, 2026 is likely to see some of these trends relating to regulatory reform slow down and possibly start to reverse by year-end. However, the rapid growth of AI and the evolving regulatory landscape for digital assets, among other things, are likely to continue through the year and beyond. State initiatives to plant their own flags around regulation and consumer protection and increased civil litigation are likely here to stay.

The State of the Regulators

The second term of President Donald J. Trump unleashed a rapid and extensive deregulatory agenda.

Almost immediately, there was a direct challenge to independent agencies, particularly the Consumer Financial Protection Bureau (CFPB), but also the attempted firings of Democratic-appointed members of the Federal Reserve Board (FRB), the Federal Trade Commission (FTC), and the National Credit Union Administration (NCUA), among others. But there were also smaller changes at the federal banking regulators that may be just as impactful on the regulatory landscape in the year to come.

Consumer Financial Protection Bureau

The Trump administration moved quickly to install Project 2025 architect and outspoken CFPB critic Russell Vought as the Acting Director of the CFPB, and, under Acting Director Vought, attempted to shutter the CFBP altogether. Vought attempted to remove the CFPB’s funding, cancel its lease for office space, terminate over 90% of its staff, and transfer enforcement of the statutes under CFPB’s purview to the Department of Justice.

However, lawsuits brought by National Treasury Employee’s Union (NTEU), the employee’s union that represents CFPB staff, were successful in thwarting some of these efforts, at least for now, and the CFPB has resumed some operations after receiving its statutory funding for 2026.

The Bureau, while not fully eliminated, will spend 2026 in a greatly diminished state. It has suffered massive staff departures and, to date, has not resumed conducting meaningful examinations or enforcement activities. The agency that conducted several hundred thorough, on-site examinations per year during its first decade conducted none in 2025 and, according to recent announcements made by senior CFPB staff, plans to conduct fewer than 70 examinations in 2026, all virtual. This signals a shift back to examinations, but with far less heft and rigour than companies experienced prior to 2025.

Enforcement also ground to a halt in 2025, and has shown few signs of life. Many investigations pending in January of 2025 were formally closed and lawsuits filed by the CFPB under former Director Chopra formally withdrawn. However, the Bureau still has some active investigations that have not been closed, and at least a few have returned to active status, which might signal more enforcement activity to come in 2026, albeit with different priorities and with an agency in a much different negotiating position than it was prior to 2025.

More changes may come to the CFPB by year end as well. If Democrats are able to retake control of one or both houses of Congress in the upcoming midterms, there will likely be an effort to remove Vought as Acting Director and install a permanent Director who can be confirmed by the Senate, or a push for a reform solution that creates a bipartisan board or commission to oversee the CFPB’s activities.

Any such developments remain to be seen; in the meantime, we expect that the Trump administration will continue its efforts to weaken and, to the extent possible, attempt to eliminate the CFPB with lawsuits tying up any major movements. The lawsuit brought by the NTEU is currently under review by the D.C. Circuit en banc, which is expected to issue an opinion sometime later this year or in early 2027.

Federal banking regulators

The changes at the other federal banking regulators were more subtle, but nevertheless impactful.

The federal banking regulators each removed “disparate impact” from their respective fair lending examination guidelines, and removed “reputational risk” from their supervisory frameworks.

Both of these actions will likely ease pressure on regulated depositories, including fintech sponsor banks. Additionally, new Federal Deposit Insurance Corporation (FDIC) Chairman Travis Hill reversed several Biden-era initiatives, and these actions will likely further facilitate bank mergers, brokered deposit relationships, and other fintech banking-as-a-service (BaaS) partnerships that had begun to strain under the Biden administration’s more stringent third-party oversight guidelines. With these changes, 2026 looks to be a year of continued growth in BaaS relationships, as discussed in more detail below.

Further, the Office of the Comptroller of the Currency (OCC) has actively encouraged de novo bank charter applications, and has dramatically decreased the processing time and costs associated with being granted a bank charter.

From 2011 through 2024, the OCC received, on average, fewer than four charter applications per year. In 2025, the OCC received 14 de novo charter applications, more than triple the average number of applications over the prior decade. And it is not just receiving the applications. The OCC is seeking to review these applications on an expedited timeline and appears to be moving quickly to conditionally approve the applications, as evidenced by the five crypto-focused trust charters that it conditionally approved in December 2025.

State regulators

Deregulation at the federal level was countered by states exercising their own authorities to fill the perceived regulatory void and seeking to assert more authority over consumer financial services products.

Several states have adopted their own versions of the CFPB or amended their consumer protection laws to enable them to step into the role the CFPB played prior to 2025. For example, New York passed the Fostering Affordability and Integrity through Reasonable Business Practices Act (the “FAIR Act”), which expands the state’s authority over “unfair”, and “abusive” acts. In addition, New York amended the Financial Services Law to make it unlawful to engage in unlicensed activity in New York, which, among other things: (i) gives the New York Department of Financial Services superintendent the authority to impose civil penalties on individuals or entities operating without proper licensure; and (ii) allows for up to double the penalty amounts for unlicensed acts that result in consumer harm. Oregon enacted a price transparency law, which became effective on 1 January 2026 and requires that online retailers disclose all fees that a consumer must pay to complete a transaction as part of the originally listed price, which is consistent with the Biden administration’s attempt to prohibit junk fees.

State regulators have also been getting creative by forming coalitions and entering into joint efforts to examine specific areas of the consumer financial services industry more closely, making it difficult for fintechs to fly completely under the radar.

Rohit Chopra, CFPB director under the Biden administration, is now senior adviser to the Democratic Attorneys General Association’s Consumer Protection and Affordability Working Group. According to the organisation’s announcement, Chopra “will work with state attorneys general to craft and promote policies that make life more affordable for Americans, protect people’s personal data, and defend consumers from online abuses”. In this role, Chopra can help shape state enforcement and future state attorneys general (AG) coalitions, and can actively counsel them on how to employ the various circulars, bulletins, and other resources the CFPB compiled at the end of his tenure as director in its “Compendium of Recent CFPB Guidance” and “Strengthening State-Level Consumer Protections” documents, which serve as a roadmap for states to carry the torch for CFPB’s efforts while the agency is less active.

In addition to these efforts, states have continued to challenge the ability of fintechs to originate loans through bank partnerships and export the rates available to the banks nationwide. For example, Colorado passed a law to opt out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), which would force state-chartered banks based outside Colorado to comply with Colorado’s interest rate caps on loans made to state residents, rather than export the rates available in the bank’s home state nationwide. While this move has been controversial and subject to challenge, the Tenth Circuit has allowed the Colorado law to take effect pending further review, which are anticipated to be an en banc review by the full Tenth Circuit or a petition to the Supreme Court.

State actions in 2026 will determine whether states can effectively counterbalance the deregulation at the federal level. Fintechs should expect much more robust examination and enforcement action at the state level than in previous years.

The State of the Market

Below, we describe the most active developments in fintech markets and what it means for the coming year.

Artificial intelligence

AI made its presence known in all industries in 2025, and the fintech industry was no exception. Fintechs have been incorporating AI into all aspects of their product life cycles, from data mining and fraud prevention to underwriting and customer service.

At the federal level, President Trump has made it known that deregulation of AI is a priority. In December 2025, Trump issued an Executive Order (EO) characterising AI as a technological arms race and emphasising the importance of a national standard for its regulation. The EO calls for the establishment of an AI Litigation Task Force for the purpose of challenging any state regulations of AI that are inconsistent with the goal of a “minimally burdensome” regulatory framework for AI. The EO suggests that state laws that require alterations to the truthful outputs of AI models may require businesses to engage in deceptive acts or practices affecting commerce, in violation of the FTC Act.

In response to this AI boom, states are beginning to enact laws regulating the use of AI in various contexts, including consumer financial services. For example, the Colorado Artificial Intelligence Act (CAIA) regulates “high-risk” AI systems. Among other things, the CAIA requires that developers of such systems, and the “deployers” utilising them, use reasonable care to avoid algorithmic discrimination in connection with any “consequential decisions” related to various significant aspects of consumer life, including education, health care, housing, and financial and lending services. The CAIA’s passage was met with opposition from AI industry groups, but also concerns from consumer advocates that the law did not go far enough to protect consumers, which resulted in attempts to amend the statute. However, substantive reforms could not be agreed upon, and the resulting compromise was that the CAIA’s effective date was pushed from 1 February 2026 to 30 June 2026.

Banking as a service (BaaS)

Last year, we witnessed a softening in scrutiny of the BaaS market, and we expect this trend to continue in 2026. BaaS partnerships have been foundational to fintech operations. However, in the last few years, particularly under the Biden administration, banks had been pulling back from these partnerships, requiring greater and greater levels of due diligence in order to enter into and operate under these agreements, and banks had generally been backing away from the market. This previous tightening of the BaaS market was almost entirely due to pressure from the banks’ regulators.

However, as described above, the removal of “reputational risk” from the federal banking regulators’ supervisory frameworks removes one of the common cudgels often deployed against BaaS partnerships. And, generally, banks in 2025 seemed emboldened by the perceived regulatory environment, and were more willing to venture back into the BaaS market, leading to a substantial uptick in new BaaS partnerships.

We expect this trend to continue, with more banks entering the BaaS market, and fintechs finding more potential bank counterparties, decreased due diligence and regulatory hurdles, and greater opportunities for partnership and innovation.

Earned wage access products

Another area of focus has been earned wage access (EWA) products, which offer a way for employees to access their earned wages before they are scheduled to be paid, have become a popular fintech product in recent years. Prior to Trump’s second term, the CFPB issued various guidance regarding EWA products, including a Proposed Interpretive Rule in 2024 suggesting that instant delivery fees on earned wage access products constitute finance charges under the Truth in Lending Act (TILA). However, the current Bureau rescinded this guidance through a December 2025 Advisory Opinion, which clarifies that, in the vast majority of cases, instant disbursement fees are not finance charges under TILA.

In response to the absence of regulation of EWA products at the federal level, several states have passed laws governing these products, including new laws passed by Indiana and Maryland in 2025. On 1 October 2025, Connecticut enacted a new law which classifies EWA products as small loans subject to licensure, fee caps, and disclosure requirements. Other states, such as Arizona and Montana, have taken the approach of issuing official opinions stating that fully non-recourse, no-interest EWA products are not loans.

State AGs have also taken interest in EWA products. In April 2025, New York Attorney General Letitia James brought an action against MoneyLion, Inc. and DailyPay, Inc. alleging that they are offering predatory payday loans disguised as EWA products. The suit specifically alleges that the providers utilise deceptive marketing tactics to trick consumers into thinking that they will receive instant access to their earned wages with zero fees, when in reality immediately available loans carry fees as high as USD8.99 for a USD100 advance to be repaid in two weeks. Similarly, several EWA providers have been sued in civil court, with the cases still pending, typically alleging that the products are consumer credit transactions as defined under the TILA and covered under the Military Lending Act (MLA), with any voluntary “tips” or expedited delivery fees treated as finance charges under both statutes. However, these cases are still pending, and each involves fact-specific inquiries regarding whether the fees are required or being imposed by the creditor incident to the transactions and thus subject to disclosure rules, usury limits, and other protections under state and federal law.

The 2025 Advisory Opinion cuts against these allegations, but these cases will continue to develop across 2026 and, given that courts are no longer bound by agency interpretations of the law, will be subject to de novo review, which could lead to different courts inconsistently interpreting and applying provisions of statutes like TILA and the MLA.

Buy now, pay later (BNPL)

In May 2025, the Trump administration announced its decision to abandon a Biden-era interpretive opinion issued by the CFPB, which took the position that buy now, pay later (BNPL) companies must comply with TILA like other consumer lenders. However, states continue to show interest in BNPL products.

New York passed the “Buy Now Pay Later Act”, which, among other things, imposes licensing requirements, caps interest rates, requires the Superintendent of the Department of Financial Services to establish maximum fee limits, and imposes disclosure and record retention requirements. The New York BNPL Act has a broad scope with respect to the products and entities covered. It applies to point-of-sale instalment loans regardless of whether interest or finance charges are assessed and irrespective of the number of instalments required to repay the loan. In addition, the term “buy-now, pay-later lender” includes lenders and other persons who operate a platform, software, or system with which a consumer interacts and the primary purpose of which is to allow third parties to make BNPL loans. Further, while federally chartered depository institutions are exempt from the prior written authorisation requirement, state-chartered depository institutions are not, which is a surprising and unusual distinction in the context of state lending laws.

On 1 December 2025, a group of state AGs issued demands to six of the market-leading BNPL providers, requesting information regarding their BNPL products. Among other information, the AGs specifically requested information about how BNPL providers assess a consumer’s ability to repay, and information regarding billing practices, late fees, and handling of disputed charges.

Cryptocurrency

On 18 July 2025, Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act, which is the most significant federal law regulating cryptocurrency to date. In enacting this legislation, the Trump administration has promised to make the United States the “crypto capital of the world”.

Some of the key aspects of the GENIUS Act are as follows:

• Only approved, regulated entities (bank subsidiaries, federal non-banks, or qualified state entities) may issue stablecoins.
• Issuers must hold 100% backing in US currency, demand deposits, or Treasury bills with maturities of 93 days or less.
• Issuers are prohibited from using misleading marketing regarding government backing or FDIC insurance.
• States may regulate smaller issuers (USD10 billion or less) with federal oversight over larger issuers.

The GENIUS Act requires that final regulations be issued within one year of enactment, with full implementation 18 months after enactment or 120 days after the final regulations are issued.

Stablecoins represent approximately 30% of the total transaction volume for cryptocurrencies, and it remains to be seen how the rest of the market will fare in 2026. Certainly, the Trump administration has been strongly supportive of cryptocurrencies, issuing the Trump EO, signing the GENIUS Act, and conditionally approving five crypto-focused trust charters. However, BTC, ETH, and all the other major cryptocurrencies had negative price returns in 2025.

The importance of cryptocurrencies and other blockchain-based innovations in the fintech space has always waxed and waned based on broader market fluctuations. We suspect greater growth in the fintech space if the broader cryptocurrency market improves, but lagging demand until that time.

Conclusion

The fintech landscape in 2026 reflects a market in transition. At the federal level, the sweeping deregulatory agenda has created new opportunities for innovation, while simultaneously introducing uncertainty as longstanding regulatory frameworks are dismantled or weakened. This federal retreat has not created a regulatory vacuum; rather, it has prompted states to assert their own authority over the industry, leading to a patchwork of state-level requirements that fintechs must navigate carefully.

For fintechs operating in this environment, the year ahead presents both opportunities and challenges. The relaxation of federal oversight may facilitate growth, but companies should remain vigilant. State regulators and attorneys general are increasingly co-ordinated in their enforcement efforts, courts are taking a more active role in interpreting financial regulations following the demise of Chevron deference, and pending litigation around products like EWA and BNPL could reshape the regulatory landscape at any time. Companies that invest in robust compliance frameworks now, which can adapt to both state-level requirements and potential shifts in federal policy, will be best positioned to thrive in the years ahead.