The end of the intermediary? Trump’s executive order and the battle for the fed’s payment rails

On Tuesday, May 19, 2026, the landscape of American finance shifted. With a stroke of a pen, President Trump signed an Executive Order that could effectively dismantle the “gatekeeper” status of traditional banks. The order directs the Federal Reserve and other key financial regulators to review and, where necessary, dismantle regulations that prevent non-bank fintechs and digital asset firms from accessing the central bank’s payment rails.

For the uninitiated, this is not just another piece of administrative paperwork. It is a direct challenge to the Federal Reserve’s long-standing policy of exclusion regarding “Master Accounts” the golden tickets that allow financial institutions to settle transactions directly through the Fedwire system without needing a traditional “partner bank” as a middleman.

Breaking the Banking Monopoly

For over a decade, the fintech industry has operated under a “dual-tier” system. While fintechs provided the user experience, the innovation, and the speed, they remained tethered to the legacy infrastructure of Tier 1 and Tier 2 banks. This “banking-as-a-service” (BaaS) model, while functional, has often been a bottleneck. It introduced counterparty risk, added significant layers of fees, and, as seen in the recent regulatory crackdowns on several US partner banks, created a single point of failure for high-growth firms.

The Executive Order seeks to “level the playing field,” suggesting that the current system stifles innovation by forcing the most modern financial companies to rely on the infrastructure of their competitors. If the Federal Reserve follows through, the implications are vast. A fintech with a Master Account can settle payments in real-time, 24/7, with the same finality and security as JPMorgan or Goldman Sachs.

The “Kraken” Precedent and the Fed’s Resistance

The timing of this order is no coincidence. In March 2026, the industry saw a crack in the dam when Kraken Financial became the first digital asset-focused bank to secure a “skinny” Master Account. This move followed years of litigation and intense lobbying, yet it remained an outlier. Other firms, most notably Custodia Bank, have faced a wall of resistance, with the Fed frequently citing concerns over “financial stability” and the “untested nature” of non-bank institutions.

The Federal Reserve has historically argued that granting Master Accounts to non-banks could lead to a fragmented financial system that is harder to monitor for systemic risk. However, the new Executive Order signals that the administration views this “caution” as a form of protectionism. By ordering a formal review, the White House is essentially demanding that the Fed provide a technological and regulatory roadmap for access, rather than a blanket “no.”

A Tale of Two Jurisdictions: US vs. UK

For our readers in the United Kingdom, this debate feels remarkably familiar, albeit inverted. The Bank of England (BoE) has long been seen as a pioneer in this space. Since 2017, the BoE has allowed non-bank Payment Service Providers (PSPs) to apply for settlement accounts in its Real-Time Gross Settlement (RTGS) system.

Firms like Wise and Revolut have already demonstrated that non-bank access does not lead to financial collapse. Instead, it has fostered one of the most competitive payment landscapes in the world. UK-based fintechs looking to scale in the US have often been frustrated by the lack of a similar “on-ramp” to the Fed’s rails. This Executive Order could finally align the US with the BoE’s more progressive stance, potentially opening the door for UK fintech “titans” to compete on equal footing in the American market.

The Operational Reality

While the prospect of direct access is a win for fintech margins, it brings a heavy operational burden. Direct access means direct responsibility. Right now, many fintechs rely on their partner banks’ compliance frameworks to satisfy federal requirements.

Without that shield, fintechs must invest heavily in:

1. Direct Regulatory Reporting: Firms will need to provide the Fed with real-time data on liquidity, capital ratios, and transaction monitoring.

2. Autonomous AML/KYC: The days of “outsourced” compliance are over. Fintechs will need to prove their internal systems can detect and block illicit flows with the same efficacy as a systemic bank.

3. Cyber Resilience: As direct participants in the nation’s payment infrastructure, fintechs become high-value targets for state-sponsored actors. The security requirements for holding a Master Account are significantly higher than those for a standard business bank account.

What Happens Next?

The Executive Order gives the Federal Reserve a limited window to report back with a plan to “modernize and democratize” access. We expect to see a surge in applications for “Special Purpose Depository Institution” (SPDI) charters and similar state-level licenses that aim to bridge the gap between fintech and traditional banking.

For the C-suite at fintech firms in London and New York, the infrastructure of finance is being re-wired. The winners of the next decade won’t just be the firms with the best app, but the firms that can demonstrate the regulatory maturity required to sit at the table with the central bank.

The gates are being forced open. The question is: who is ready to walk through them?