3 FINTECH NEWS STORIES
#1: The CFPB Finally Does Something On Crypto
What happened?
The CFPB, which has been frantically trying to get as much done as possible before its Director is fired, proposed an interpretive rule stating that the Electronic Funds Transfer Act (EFTA) applies to a much broader set of accounts than just checking and savings accounts (emphasis mine):
“Other consumer asset accounts” include prepaid accounts, and other asset accounts established primarily for a consumer’s individual, family, or household use, that are not checking accounts or savings accounts, but into which funds can be deposited by the consumer or on their behalf and which have features of deposit or savings accounts. Such features include, but are not limited to: paying for goods or services from multiple merchants, ability to withdraw funds or obtain cash, or conducting person-to-person transfers. Depending on the facts and circumstances, the following could be considered “accounts” under EFTA: video game accounts used to purchase virtual items from multiple game developers or players; virtual currency wallets that can be used to buy goods and services or make person-to-person transfers; and credit card rewards points accounts that allow consumers to buy points that can be used to purchase goods from multiple merchants.
So what?
Institutions that provide covered accounts under Reg E (the implementing regulation for the EFTA) are required to make consumer disclosures and provide protections against unauthorized transactions (including reimbursements) and the ability to cancel improper transfers.
The call-outs in this proposed rule for video games and credit card rewards aren’t shocking. Both of those have been hobbyhorses of Director Chopra for a while now.
Cryptocurrency is the surprise.
Over the past few years, the CFPB has seemed almost allergic to research, supervision, or enforcement focused on the crypto industry despite ample UDAAP problems. And yet, at the 11th hour, here they are taking a direct shot at stablecoins:
Based on the plain language used in EFTA and the reasoning of judicial decisions, as well as the CFPB’s experience in market monitoring, it has long been clear that the term “funds” in EFTA is not limited to fiat currency like U.S. dollars. The CFPB interprets the term “funds” to include assets that act or are used like money, in the sense that they are accepted as a medium of exchange, a measure of value, or a means of payment. Under this interpretation, the term “funds” would include stablecoins, as well as any other similarly-situated fungible assets that either operate as a medium of exchange or as a means of paying for goods or services.
Some folks in the crypto industry were not amused. Here’s Bill Hughes, director of global regulatory matters at Consensys:
Hacked because you tweeted you emailed your seed phrase or believed that fashion model in Malaysia needed 5000 bucks to fly to see you? Don’t worry your wallet might have to cover it …
And you thought the Warrenites were done with us, didn’t you? Their co-opting of crypto under the banner of consumer protection (who can argue with protecting consumers after all?) won’t stop until someone stops it.
If the crypto industry is serious about advancing the argument that its products provide essential, broad-based utility for consumers (an argument I agree with regarding stablecoins!), it should stop brushing off attempts to improve consumer protections.
Indeed, when it comes to money storage and payments, which is where stablecoins thrive, the crypto industry should be running as fast as it can toward consumer protections like the ones guaranteed by the EFTA. It won’t protect against everything (Mr. Hughes’ Malaysian model hypothetical sounds like a consumer-authorized scam, which wouldn’t be covered under Reg E), but it would be a significant improvement over the status quo.
#2: Robinhood Is All In On Event Contracts
What happened?
Vlad Tenev, CEO of Robinhood, did an interview with TechCrunch in which he talked about Robinhood’s interest in offering more access to prediction markets after the company’s success in enabling customers to bet on the outcome of the U.S. presidential election:
I’ve been a big fan of prediction markets for a long time, and it became clear to me relatively early on that political contracts are the ideal product in that space, because [politics] is very newsworthy and highly correlated to market performance, so useful as a hedge.
Our focus is on event contracts. I think that’s going to be a big thing. The presidential election market proved to us that there’s a lot of demand for these types of products. We had over half a billion contracts traded in about a week [by more than] half a million people. And so I think that the number one thing we were hearing afterward was: Can we have more contracts? Can this be a more-fleshed-out product and not just for the election?
So what?
What types of event contracts, you ask?
Well, there was reporting a while back that Robinhood is interested in sports betting. Tenev threw a small glass of cold water on that idea in this TC interview, saying that companies are not currently allowed to include sports outcomes in event contracts (though he hinted that might change).
Instead, Tenev said that Robinhood is interested in expanding beyond politics into economics:
A natural fit for Robinhood is economic ones. You can see some examples of a Fed hike, a Fed drop … anything that’s at the intersection of news and financial markets is interesting to us.
He also pointed out the potential for prediction markets to power news content:
You can have event contracts on pretty much anything from the Oscars and entertainment events to sports to politics. And the categories of event contracts almost become like the sections of a newspaper, right? Art, style, leisure, sports, business, [the] front page, which is real-time. So, you can imagine the digital equivalent of a newspaper being delivered via event contracts.
This isn’t as crazy as it sounds. Robinhood already owns a media business (Sherwood News), which it has sunk considerable resources into. One can imagine a near future in which Sherwood’s news coverage is informed by the prediction markets that Robinhood powers across various industries and topics (politics, economics, entertainment, etc.) Indeed, there is already a prototype of what this can look like out in the world. Packy McCormick at Not Boring recently launched Boring News, a daily news podcast algorithmically created by combining generative AI and prediction markets. (Editor’s Note — Boring News has no editors or reporters, which would make me nervous if I worked at Sherwood News.)
I sometimes like to imagine what the average mobile banking app will look like in 10 years if certain fintech trends hold true. Robinhood seems to be envisioning something like if Google News was the surrogate for a baby raised by Coinbase and Kalshi (with Fidelity as the baby’s rich godfather).
#3: 2024 Was A Bad Year For Neobanks
What happened?
Ron Shevlin at Cornerstone Advisors released some new research on checking account opening. On the surface, the results are positive for neobanks:
Digital banks and fintechs dominate new checking accounts opened…Digital banks and fintechs captured nearly half (44%) of all new checking accounts opened in 2024. Combined, megabanks (Bank of America, Chase, Citi, and Wells Fargo) and regional banks (those with $100 billion to $1 trillion in assets) accounted for 43% of all accounts opened.
Combined, [Chime and PayPal] accounted for nearly half (49%) of digital bank/fintech account openings—up from 43% in 2023—and 21% of all checking accounts opened in 2024.
So what?
However, if you dig in a little deeper, the picture gets less rosy:
Digital banks’ and fintechs’ 44% market share was down from 47% in 2023, as megabanks gained back three points and regional banks won back two percentage points.
Last year, more than third of Gen Zers and Millennials, and nearly three in 10 Gen Xers, called a fintech or digital bank their primary checking account provider. Today, just 29% of Gen Zers and Millennials—and just 22% of Gen Xers—consider a fintech or digital bank to be their primary checking account provider.
Among digital banks and fintechs, the big mover—and not in a positive way—was Chime. In 2023, 10% of Americans considered Chime to be their primary checking account provider. In 2024, that percentage fell to 6.5%. Causing this decline was a 6-point drop in the percentage—from 12.3% to 6.3%—of Gen Zers who consider Chime to be their primary checking account provider.
Yikes.
It’s important to remember that this data is self-reported by consumers, and consumers don’t always understand the questions they are being asked. This is why PayPal shows up at the top of a list of companies gaining the most checking account customers even though it doesn’t offer checking accounts. Consumers often don’t distinguish between a checking account and an app where they can store and spend their money (like a digital wallet).
It should also be noted that interpreting consumer survey data isn’t an exact science, as Ron’s way-too-high estimates of Chime’s customer base last year remind us.
Still, this is a bit concerning for Chime and its fellow neobanks. Regardless of how they are actually being used, customers’ perception of them as their primary financial account providers is slipping.
In the case of Chime, Ron theorizes that this may be due to the company being seen as less cool by the kids:
Emerging generations love to rebel and disavow the previous generation(s). Gen Zers may see Chime as “Millennials’ bank” and may not see it as the cool fintech to bank with. In a YouGov study of bank customer satisfaction, Chime was ranked number six among Millennials and fourth among Gen Xers—but wasn’t even in the top 10 among Gen Zers.
This seems reasonable to me. I’d add that these declining numbers may also reflect a general loss of trust in neobanks following the Synapse meltdown last spring.
2 FINTECH CONTENT RECOMMENDATIONS
#1: The Alchemists (by Michael Cembalest, JPMorgan Chase) 📚
This is the single best report I have read on the economic outlook for 2025 (and, more broadly, for the second Trump presidency).
The implications for banking and fintech are profound.
Read this.
#2: Unfair and Abusive Automatic CD Rollovers (by Adam Levitin, Credit Slips) 📚
My favorite thing is discovering nerdy, niche financial services publications that I didn’t know existed.
Credit Slips is the newest one. It’s glorious.
This article on the application of UDAAP to CD rollovers is a great example of what I’m talking about. Super specific and super interesting.
1 QUESTION TO PONDER
Let’s play fintech M&A Jeopardy:
Answer — This fintech company, acquired in 2025, was widely considered by industry watchers to be the most unexpected fintech acquisition of the year.
OK, put on your prognostication caps and tell me — which company will be the most surprising acquisition in fintech this year? And which company is going to acquire them?
