US presidential election: What’s next for US fintech under Trump?
Americans went to the polls for a presidential election on 6 November, with Donald Trump emerging victorious to serve a second term as US president.
Trump has become only the second US president to hold non-consecutive terms
Trump, who will become only the second US president to hold non-consecutive terms after Grover Cleveland, elected in 1884 and 1892, triumphed with a decisive 312 electoral votes, surpassing Kamala Harris, who received 226.
Speaking after his victory, Trump declared that he had orchestrated “the greatest political movement of all time”, claiming the American people had given him an “unprecedented and powerful mandate” and promising to usher in “the golden age of America”.
As the Trump-Vance administration gets ready to take office, let’s take a look at what might be next for the US fintech sector.
Hints from Trump’s first term
A good place to start might be to look back at Trump’s first term. Are there any clues that could help us understand his approach towards the sector this time around?
Arguably, Trump’s most significant impact on the sector was his push to scale back regulations, which many believe fostered a pro-business environment, reduced barriers, and boosted market competition.
During his tenure, several financial regulations were eased, most notably the Dodd-Frank Act, which was designed to reduce excessive risk-taking by financial institutions.
In 2018, Trump signed a rollback measure that lifted the threshold for federal stress tests to $250 billion and exempted banks with under $10 billion in assets from the Volcker Rule, which restricted proprietary trading. The Trump administration argued that certain Dodd-Frank provisions were stifling growth and innovation.
Going forward, more efforts to ease regulations may be on the cards, with leadership changes expected at the Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Act.
2025 and onwards
Trump is set to take office in 2025. In the meantime, fintechs and financial institutions are left speculating about which areas his policies will have the greatest impact on.
Crypto
Dr Rhys Bidder, deputy director of the Qatar Centre for Global Banking and Finance at King’s College London, predicts that Trump’s election win “will likely provide a broader boost to crypto”.
During the election campaign, Trump labelled himself the “crypto president” and promised to make the US the “crypto capital of the planet”.
“Under Trump, crypto will have no excuse if it can’t shed its (perhaps undeserved) image as immature and riddled with fraud,” adds Dr Bidder.
Trump has also pledged to block the creation of a US central bank digital currency (CBDC). Speaking at a rally in New Hampshire earlier this year, the president-elect declared: “As your president, I will never allow the creation of a central bank digital currency.”
“Such a currency would give the federal government – our federal government – the absolute control over your money. They could take your money, you wouldn’t even know it was gone. This would be a dangerous threat to freedom – and I will stop it from coming to America,” he added.
Open banking
“Open banking in the United States stands at a critical juncture,” says Pinar Ozcan, Professor of Entrepreneurship and Innovation at Oxford University. “Despite substantial market-driven advancements, the impending shift to a more regulated landscape promises both advantages and obstacles,” Ozcan adds.
The CFPB recently solidified consumers’ rights to access and securely share their financial data with third parties under its Personal Financial Data Rights Rule, introduced through Section 1033 of the Dodd-Frank Act.
In an interview with Forbes, Katherine Flocken, a principal at regulatory advisory firm FS Vector, expressed her belief that the rule is likely to remain under Trump, as it is a bipartisan regulation.
AI and cybersecurity
AI has advanced significantly since Trump’s last term, and this progress has ignited a new technological arms race and increased cybersecurity risks.
Trump plans to reverse Biden’s October 2023 AI Executive Order
As outlined in the Republican Party platform, the Trump-Vance administration intends to overturn Biden’s October 2023 Executive Order on AI, which aimed to set standards for the future development and usage of the technology.
“We will repeal Joe Biden’s dangerous Executive Order that hinders AI innovation, and imposes radical left-wing ideas on the development of this technology,” the manifesto states.
While Trump aims to accelerate AI advancement, he has also called it “very dangerous” due to concerns over cybersecurity risks.
During his previous term, Trump initiated a national cybersecurity strategy to upgrade IT infrastructure and combat cyber threats. All signs suggest his upcoming administration will prioritise similar measures.
The Republican Party has vowed to use “all tools of national power” to protect “critical infrastructure and industrial base from malicious cyber actors”, signalling a focus on boosting government investment and fostering partnerships with private tech firms to strengthen defences.
Concluding thoughts
When predicting the next four years for the US fintech sector, as with Trump’s first term, the signs seem to be pointing to a loosening of regulations. Policy experts also believe organisations and individuals will become more emboldened in challenging regulators under Trump’s tenure.
Looking beyond the US, Trump’s election could pose challenges for international fintechs, as his inclination toward trade tariffs may make US expansion less financially attractive. However, given the US is the largest fintech market in the world, the full impact of this remains to be seen.
