USA – NEW YORK Trends and Developments Contributed by: Sam Davidson, Davidson Firm PLLC
though the underlying banking services are provided by FDIC-insured partner banks. This enforcement pattern demonstrates that consumer-facing entities bear independent compliance obligations regardless of whether a chartered institution stands behind the product. A similar logic applies to algorithmic pric - ing disclosures. When pricing decisions flow through distributed technical systems spanning multiple legal entities, the exemption is not automatic. Contractual arrangements between fintech and bank partners do not automatically extinguish regulatory duties that attach to the party controlling the consumer interface or pricing. Disclosure analysis in three models • Bank-Controlled Pricing: The bank owns and operates the pricing engine. The fintech provides marketing and servicing functions. In this structure, the GLBA exemption likely applies. • Fintech-Developed Algorithm With Bank Oversight: The fintech designs and operates the pricing mod - el. The bank approves parameters and guardrails but does not control real-time outputs. In functional terms, the fintech may be setting the price, and a disclosure may be required. • Marketplace and Aggregator Platforms: A fintech that personalises which bank offers or rates are displayed to a consumer may fall directly within the NY Disclosure Act, even if underlying banks are exempt. The legal question of who sets a price depends on various factors: whose infrastructure hosts the pric - ing model, whose data feeds the algorithm, whose personnel modify parameters, and whose brand the consumer sees. Compliance architecture must there - fore be designed alongside technological architecture from the outset. Legal teams should monitor enforce - ment actions and case law to track evolving regulatory standards on pricing authority attribution and exemp - tion applicability in embedded finance arrangements. CFPB and federal AI enforcement under Trump The federal enforcement landscape for AI-driven financial systems has become increasingly uncertain. While the Consumer Financial Protection Bureau (CFPB) historically asserted that existing consumer financial statutes fully apply to AI-driven systems,
the current administration’s deregulatory posture and ongoing congressional efforts to limit the CFPB raise questions about future enforcement priorities. The administration has signalled limited appetite for new AI-specific rules or aggressive enforcement, save where centralisation of regulatory supervision at the federal level is necessary to effect pre-emption of state law. Congressional efforts continue to advo - cate for curtailing the Bureau’s authority, with some calling for its elimination. While statutory obligations remain on the books, the likelihood and intensity of federal enforcement are unclear, requiring companies to balance compliance investment against uncertain enforcement priorities. For fintech companies, this creates regulatory uncer - tainty at the federal level even as state requirements become more defined. The question is no longer simply dual compliance but strategic risk assess - ment: how to balance investment in federal compli - ance frameworks when enforcement priorities remain unclear against the certainty of state-level obligations. Charter strategy and competitive federalism Fintech regulatory planning requires strategic deci - sions about whether to pursue a charter, obtain a licence, or partner with a licensed entity – choices that fundamentally shape compliance obligations and operational flexibility. The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) framework, enact - ed in July 2025, establishes three distinct pathways for lawful stablecoin issuance in the United States: subsidiaries of insured depository institutions, fed - eral qualified payment stablecoin issuers chartered by the OCC, and state qualified payment stablecoin issuers. The third pathway is particularly significant. Under Section 7 of the GENIUS Act, a state quali - fied payment stablecoin issuer is defined as an entity legally established under state law – including state trust companies – and approved by a certified state payment stablecoin regulator. This framework enables state trust charters, subject to state banking depart - ment oversight, to issue payment stablecoins with - out converting to a federal charter, provided the state regulatory regime is certified by the Stablecoin Certi -
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