Published on
July 1, 2026
House hearing exposes divide on fintech payments regulation
House hearing exposes split on applying bank-like rules to fintechs, stablecoins, and nonbank payment providers.
A House hearing on payments policy laid bare a widening split over how Washington should regulate fintechs, crypto-native firms, and other nonbank providers that now handle services long dominated by banks.
At the center of the debate was a basic question with broad consequences for the payments market: whether Congress should require nonbanks that perform bank-like payment functions to meet similar standards, or instead ease banking rules to preserve flexibility and competition.
New entrants now provide services through mobile payment applications, digital wallets, and real-time payments, often under frameworks different from those applied to banks. The hearing examined whether existing chartering structures, including those for industrial loan companies, trust banks, and money transmitters, are keeping pace.
Competing visions for oversight
David Portilla from Davis Polk & Wardwell LLP argued that the current imbalance cannot last. "New entrants such as fintechs, big tech firms, and crypto-native companies are increasingly competing with banks in core payment functions but operating under materially lighter regulatory burdens", Portilla testified.
Portilla said several large technology platforms now process payment volumes comparable to mid-size U.S. banks without prudential oversight. He urged Congress to create a federal framework that would apply consistent rules based on the payment function being performed, regardless of charter type. He also called for nonbank payment providers to satisfy liquidity, capital, and consumer protection standards comparable to those imposed on insured depository institutions, pointing to the 2023 collapse of several crypto intermediaries.
Paige Paridon from the Bank Policy Institute backed a similar approach. "Banks are subject to comprehensive prudential regulation, consumer protection law, CRA obligations, and anti-money-laundering requirements, while nonbank competitors offering functionally identical services face little or none of this oversight", Paridon said.
According to the source article, Bank Policy Institute member banks collectively hold over 20 trillion dollars in assets and face thousands of pages of regulatory requirements that nonbank competitors largely do not. Paridon cited the 2023 FTX collapse as evidence of the risks of weak oversight.
sbb-itb-e766981
Industry witnesses warn against bank-style rules
Eileen O'Mara, vice chair of Stripe, told lawmakers that extending bank-equivalent requirements to payment firms would suppress competition and increase costs for consumers. "We should establish a unified federal licensing framework for payment service providers, replacing the current patchwork of 50-state money transmitter licensing requirements", O'Mara testified.
O'Mara also recommended updating the Electronic Fund Transfer Act to better reflect real-time payments and digital wallets.
Rachel Anderika, head of global operations at Anchorage Digital, advocated what the source article described as a middle path. Anchorage Digital is the only federally chartered digital asset bank in the U.S., and it received its Office of the Comptroller of the Currency charter in January 2021.
Anderika called for enacting a federal payment stablecoin framework that provides a clear, consistent regulatory pathway for federally chartered digital asset banks to issue stablecoins. She also supported preserving OCC authority to charter digital asset firms that meet full prudential standards and backed interoperability standards connecting digital asset payment rails with traditional payment infrastructure.
Consumer advocates press for stronger protections
Tara Flynn from the National Community Reinvestment Coalition argued that lighter regulation could leave vulnerable households worse off. The source article says about 4.5 percent of U.S. households, roughly 5.9 million, remain unbanked. It also says Black households are unbanked at a rate of 11 percent, while Hispanic households face a 9 percent unbanked rate.
She also highlighted the growth of Buy Now Pay Later products among lower-income consumers, with delinquency rates rising, and cited Consumer Financial Protection Bureau data that BNPL borrowers are more likely to be financially distressed. The source article says check-cashing and prepaid card fees can cost unbanked consumers hundreds of dollars annually compared to bank account holders.
Flynn called for stronger CFPB oversight of nonbank payment platforms, including BNPL products and digital wallets, as well as fee transparency, fee caps for unbanked consumers, and interoperability so consumers can move funds between platforms without penalty.
Lawmakers raise concerns about super apps and AI
The hearing also surfaced concerns about concentration and technology. Rep. Bill Foster warned about agentic AI and the prospect of agent-to-agent transactions moving through the financial system at higher speed and on a 24-7 basis. He said those conditions could create risks including AI-driven bank runs and trading app-driven flash crashes.
Using examples from abroad, Foster said China’s WeChat and Alipay have become dominant, vertically integrated super apps. "These super apps can access cell phone location data and customer transaction data that ordinary banks cannot access, giving them competitive advantages in lending", Foster said.
The source article also says Foster pointed to Facebook’s acquisition of a payment super app with more customers than there are people in the United States, and raised concerns about Elon Musk’s plans to use a one and a half trillion dollar IPO to turn X into a super app offering financial advisory, chatbot, and commerce services.
Stakes for Congress
The hearing unfolded as the stablecoin market continued to expand. The source article says the global stablecoin market exceeded 200 billion dollars in 2025, with U.S.-dollar-denominated stablecoins making up the majority. It also says blockchain-based cross-border payment settlement can reduce transaction times from days to seconds and cut costs by up to 80 percent.
For traditional banks and merchants, the economic stakes are also high. Small businesses in the U.S. spend an estimated 100 billion dollars annually on payment processing fees, while U.S. interchange rates are 2-3 times higher than EU rates following EU interchange fee regulation. Cross-border payment costs for small businesses average 3-5 percent, compared to near-zero marginal cost for domestic digital transfers.
Committee Chair French Hill, a Republican, stated that "Committee Republicans are committed to advancing policies that provide greater regulatory certainty, consistency, and transparency to support innovation."
Still, the hearing showed that the divide is not simply between parties. The source article says Republicans themselves are split over whether innovation in payments depends on lighter regulation or stronger guardrails.
That leaves Congress facing unresolved questions over stablecoin rules, real-time payment infrastructure, and the chartering framework for digital asset banks. The outcome, as described in the source article, will shape whether payments innovation moves forward through competition or under new guardrails aimed at preventing financial super apps from dominating the U.S. payment system.
