Angie Lin, Co-Founder and Chief Investment Officer of Assured Asset Management, authored this column, originally published in Chinese in the Commercial Times on March 5, 2025. This English translation is provided to reach a wider audience. Angie is a regular columnist for the Commercial Times in Taiwan.
Since Donald Trump’s inauguration, we’ve received numerous requests for on-the-ground analysis from the US. While the new administration rapidly unveiled multiple policy initiatives, many initially offered only basic frameworks. We deliberately waited for these policies to mature before commenting. This article focuses on the Trump administration’s impact on US investments, avoiding commentary on international trade, geopolitics, or broader domestic issues.
Today, we will discuss technology policies that are most interesting to Silicon Valley and capital markets, especially their direct impact on financial technology.
The Trajectory of U.S. Technological Development
Since World War II, the United States has followed a clear development trajectory centered on technology. From radar and aerospace engineering to personal computers, semiconductors, nuclear technology, the internet, and telecommunications, technology has been the back bone of the U.S. economy. Leading technology companies have not only driven economic growth but have also ensured the country’s dominance in national defense.
This growth model, which the U.S. takes great pride in, has been shaped by a pragmatic approach to regulation—neither fully embracing nor outright rejecting it. Instead, regulatory frameworks have been continuously adjusted to align with evolving circumstances and societal values.
The Current State of Fintech Regulation
This pragmatic approach defines the current administration’s stance on the fintech industry. The primary regulatory bodies overseeing fintech in the U.S. are the Federal Reserve (FED), the Consumer Financial Protection Bureau (CFPB), and the Securities and Exchange Commission (SEC).
For many emerging financial innovations, U.S. regulators generally adopt a process where companies are first required to explain their business models. This is followed by a series of inquiries, after which regulators attempt to apply existing laws to the new developments. If no relevant legal framework exists, and after consulting industry experts and legal professionals, new legislation may be introduced only if deemed necessary. This collaborative approach reflects a practical way of working with the industry.
However, over the past four years, regulatory attitudes toward fintech have become increasingly strict. The most controversial regulatory body among industry players and investors has been the CFPB. Unlike the FED and SEC, the CFPB was established after the 2008 financial crisis to oversee misconduct in the financial sector. Its most distinctive feature is its approach of “regulation by enforcement”—a strategy where compliance requirements are often clarified only through enforcement actions rather than clear, pre-established guidelines.
Controversy Surrounding Regulation by Enforcement
The CFPB typically does not establish detailed rules defining “abusive” practices in financial services. Instead, it sets precedents through enforcement actions against specific companies, which then serve as warnings to others in the industry. The advantage of this approach is its efficiency—rather than waiting for the SEC or FED to go through a lengthy legislative process to regulate so-called “misconduct,” the CFPB can swiftly establish standards and benchmarks through enforcement.
However, the biggest drawback is the regulatory uncertainty it creates for businesses. The lack of transparency and clear, advance notice can lead to inconsistent standards for similar situations. Additionally, this approach bypasses the legislative process, which typically includes public commentary and cost-benefit analysis. These concerns have sparked intense debate, reaching a peak in several high-profile enforcement cases.
Controversial Cases
1. Operation Choke Point
Originally launched in 2013, this initiative was initially aimed at cracking down on businesses involved in fraud or illegal activities, such as online gambling and firearm sales. However, in recent years, the CFPB has expanded its regulatory reach, requiring banks to engage in preventive enforcement against businesses deemed “potentially controversial.” This has led to the preemptive closure of accounts for many legitimate fintech companies, including crypto currency exchanges, online lending platforms, and payment processors.
Fearing regulatory scrutiny from the CFPB, banks have chosen to cut ties with these “high-risk” businesses rather than risk enforcement actions. As a result, many legitimate fintech startups have been forced to shut down or have struggled to grow. This not only stifles financial innovation but also strengthens the market dominance of traditional financial institutions, ultimately reducing consumer choice. A notable example is WorldChain, a blockchain-based anti-fraud platform that was unable to operate in the U.S. due to these restrictions.
2. Buy Now, Pay Later (BNPL)
BNPL is an emerging financial service model that allows consumers to pay for purchases in installments without incurring high interest rates like traditional credit cards. With platforms such as Affirm, Klarna, and Afterpay gaining popularity, more consumers have turned to BNPL as an alternative to credit cards.
However, in 2022, the CFPB launched an investigation into BNPL providers, accusing them of potentially encouraging excessive borrowing among consumers. The agency proposed imposing the same stringent regulations as credit cards on BNPL services.
This move effectively protected traditional credit card companies while stifling BNPL—a more affordable and flexible payment solution. Critics argue that such regulatory actions contradict the CFPB’s original mission of consumer protection by eliminating innovative financial products that offer better alternatives to traditional banking options.
Policy Shift
On February 1, 2025, the Trump administration officially dismissed CFPB Director Rohit Chopra and subsequently announced a suspension of the agency’s regulatory activities. This move reflects the widespread unpopularity of the CFPB within the fintech industry.
While this policy shift may still face legal challenges, the administration’s pro-deregulation stance has been a key driver behind the surging valuations of crypto currency, blockchain, and fintech companies.
No policy exists in a vacuum—the rise of the CFPB was rooted in concerns over financial institutions abusing their power, while its recent roll back represents the market’s push back against excessive regulation. Whether it was the CFPB’s creation or its weakening and potential closure, both developments were shaped by significant market forces.
As supporters of fintech innovation, we must ask ourselves: Is overregulation stifling innovation? Deregulation does not mean abandoning oversight but rather creating an environment where entrepreneurs can innovate freely—delivering more choices and lower-cost financial services to consumers. In many cases, market-driven self-regulation proves far more effective than excessive government intervention.
Learn more about Angie’s column in The Commercial Times: https://www.ctee.com.tw/reporter/60057
