President Donald Trump signed an executive order on Tuesday directing the Federal Reserve and other financial regulators to dismantle barriers that have long kept crypto and fintech firms out of the US payments system — a move that puts the central bank at the center of a battle that has been building for years.
The order, titled “Incorporating Financial Technology Innovation into Regulatory Frameworks,” asks the heads of government financial institutions to review existing laws within three months and identify laws that “unreasonably hinder” fintech firms from cooperating with federally regulated institutions.
In six months, regulators must act on what they find.
The Fed, crypto, and government regulation
At its core, the order targets the Federal Reserve’s control over key accounts — the gateway to payment systems like Fedwire that handle high-value dollar payments throughout the financial system. Those accounts have historically been reserved for licensed depository institutions, a wall that forced crypto companies seeking direct payment access to pursue expensive charter or federal banking.
The order asks the Fed to do two things: examine whether its framework can be extended to non-bank fintech and crypto firms, and clarify that the Federal Reserve’s 12 regional banks have independent authority to approve or reject large account applications without guidance from the Board of Governors in Washington.
That second question has real weight. If regional banks can’t operate alone, crypto firms can buy a sympathetic Fed branch – a scenario already played out in March, when the Kansas City Fed approved a limited-purpose account for Payward, Kraken’s parent company, making it the first crypto exchange to win any kind of Fed payment access.
Craken Co-CEO Arjun Sethi called the program a “combination of crypto infrastructure and a private finance channel.”
But the approval came before the Fed finalized a broader policy framework — and that sequence angered traditional banking groups. The Bank Policy Institute, which represents major US banks, said it was “deeply concerned” by the timing.
That disagreement is at the center of the debate and Trump’s order is now out in the open. Rebecca Romero Rainey, president and CEO of the Independent Community Bankers of America, said the order exposes “huge gaps in regulation” between banks and non-bank organizations, and said the Fed should establish new policies for stablecoins, large accounts, and trust charters to assess their collective impact. “Works like this should be subject to the same regulations,” he said.
The Fed has been moving, if slowly, toward its answer. In December, it published a proposal for so-called “black” master accounts — restricted bank accounts that offer access to the payment system while not including features such as interest on deposits or mortgage discounts. The draft has received conflicting responses from both the crypto industry and community banks, each pushing the rules in different ways.
The executive order gives the Fed 120 days to present a formal report to the White House. That deadline turns what has been a slow regulatory process into a political one — with the Trump administration now running a timer on the agency that prizes its independence.
