USA TRENDS AND DEVELOPMENTS Contributed by: Donald J. Mosher, Melissa G. R. Goldstein, Adam J. Barazani and Leel Sinai, McDermott Will & Schulte LLP
comprehensive approaches to regulatory compliance and risk management. He supports complex regulatory diligence for corporate acquisitions and offerings. Leel also has experience conducting thorough internal investigations and spearheading remediation efforts in response to examination findings.
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Introduction The fintech regulatory landscape entering 2026 is shaped by aggressive federal deregulation. Federal agencies have dramatically scaled back rulemaking and enforcement, creating space for innovation and growth. But that space has not gone unregulated, as states have stepped in to fill the vacuum by advancing new consumer protection statutes, reviving enforce - ment tools, and asserting regulatory and enforcement jurisdiction over emerging products. This expansion of state activity has made compliance more complex and variable, particularly for compa - nies offering consumer-facing payment or credit prod - ucts. The resulting legal patchwork is prompting some companies to restructure offerings or partner with banks. Others are turning to national bank charters, which have become more attainable under the current administration and offer uniform supervision in place of state-by-state compliance. Fintechs navigating this environment must weigh the opportunities of permis - sive federal policy against the operational realities of intensified state scrutiny. Consumer Financial Protection Realignment: State Leadership Amid CFPB Retreat As the regulatory posture of the Consumer Financial Protection Bureau (CFPB) has narrowed, state regula -
tors have taken on a more central role in consumer financial protection. In 2025, a coalition of Democratic state Attorneys General launched the Consumer Pro - tection and Affordability Working Group, citing per - ceived shortcomings in federal oversight. The group is advised by former CFPB Director Rohit Chopra, whose tenure was marked by a broad interpretation of consumer protection authority. Building on rescinded or abandoned Biden-era rules, states have increas - ingly “picked up the mantle” in areas including unfair, deceptive, or abusive acts and practices (UDAAP), consumer reporting and Fair Credit Reporting Act (FCRA)-related matters, data privacy, and elements of the CFPB’s larger supervisory framework. State legislatures are also expanding the tools avail - able to regulators. For example, New York advanced the Fostering Affordability and Integrity through Rea - sonable (FAIR) Business Practices Act, which broad - ens the definition of unlawful practices and enhances remedies for consumer harm. If enacted and enforced robustly, these initiatives are likely to increase both the volume and complexity of state-level enforce - ment actions affecting fintech companies. Pennsyl - vania publicly committed to expanding the state’s use of Dodd-Frank Act authorities to enforce federal consumer protection laws, while Alaska’s Supreme Court affirmed the state attorney general’s authority
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