A change in consumer fintech

This is my first article. I look at how the Fed's move to sunset their Novel Activities Program changes bank supervision on crypto and fintech, how it lines up with the GENIUS Act on stablecoins, and where I think value shows up in the consumer world.

What was the Novel Activities Program?

The Federal Reserve supervises banks to ensure safety, standards, and compliance. In August 2023, they introduced the "Novel Activities Supervision Program," a targeted review process for bank activities involving crypto-assets, distributed ledger technology, or complex partnerships with nonbank fintech companies like embedded finance offerings delivered through mobile apps. The program applied to institutions already under Fed supervision and layered on top of existing regulatory processes.

In practice, if a bank wanted to offer crypto custody, enable tokenized settlements, or launch a new fintech partnership, they'd get pushed into this special review track. The process itself wasn't that different from normal supervision, but regulation became more intensive. That usually meant more friction for product and compliance teams.

On August 15, 2025, the Fed ended the program and said it would monitor these activities through the normal supervisory process. One review lane instead of two, streamlining planning and execution and eliminating the unpredictable layer that slowed launches.

The path back to "normal" supervision

Two earlier moves this year made this shift possible.

In March 2025, the FDIC told the banks it supervises that they don't need special pre-approval before doing crypto activities that are already allowed. They still had to manage risk and show their work during typical regulation exams. Then in July, the FDIC reminded banks how to safely hold digital assets for customers. That guidance didn't add new rules. It restated the basics that already applied: clear oversight, control of cryptographic keys, strong security, reliable operations, and compliance with the law.

All of this sits on top of existing guidance for working with vendors. Plan the relationship, do real diligence, sign strong contracts, monitor performance, and have an exit plan. Most delays come from weak vendor management, not from crypto policy itself. With those pieces in place, ending the special regulation lane simply moves everything back into the familiar workflow that product and compliance teams already know how to run.

Stablecoins and the GENIUS Act

Fintech means using software to do money-related things like paying, saving, sending, or investing. A payment stablecoin is one of those tools. It's a digital token designed to be worth exactly $1 at all times and used for paying, not for speculating on price.

Think of it as a reloadable, dollar-denominated gift card that lives on the internet. You should always be able to turn one coin back into one dollar. Behind the scenes, the company that issues the coins holds matching reserves in very safe assets like cash and short-term U.S. Treasury bills. Those reserves are what makes redemption possible.

On July 18, 2025, Congress passed the GENIUS Act, the first national rulebook for payment stablecoins. Three things matter most to everyday consumers:

1. The issuer must keep full reserves so every coin is backed 1-for-1
2. The issuer must publish monthly reports showing what's in those reserves
3. If you want your money back, the issuer must redeem at $1 quickly

The Act also puts normal money-safety rules on issuers. Verifying user identities, following the law when authorities require a freeze or reversal. That's the same compliance banks deal with, now applied to dollar-pegged coins.

The nonbank issuers are the ones you know today: Circle (USDC), PayPal (PYUSD), Paxos (USDP), and Gemini (GUSD). They're trust companies or similar, not banks, and under the GENIUS Act they can apply for a new federal license. Bank issuers are allowed too and would be supervised by their normal regulator, but no major U.S. bank has launched a consumer payment stablecoin yet. Existing bank tokens like JPM Coin and the former Signet are tokenized deposits for wholesale or internal settlement, not public $1 payment stablecoins.

Consumers get one clear set of standards, and companies know exactly which license to pursue. Those regulations combined with the Fed ending its separate review lane makes banks more willing to connect these coins to everyday products, because the path to approval is now the normal one they use for everything else.

It also draws a line so people don't get misled. Approved payment stablecoins aren't treated like stocks or commodities, and issuers can't pay interest on the coins. That lowers the odds of flashy "earn 10% cashback" marketing that burned users in past cycles and keeps the main referee as a bank-style regulator focused on payment safety.

Agencies still have to write the detailed rules and exam checklists, so features will roll out in phases. But the direction is clear. For an everyday user, this could mean seeing "Pay with USDT" at checkout or cheaper cross-border transfers that arrive fast.

Where value accrues in consumer fintech

Checkout is the clearest near-term place where these policy changes show up as real results. In June 2025, Stripe and Shopify enabled USDC stablecoin payments for millions of merchants. Stores don't need to rebuild their checkout. By default the sale settles to the merchant's bank account like any other payment, though merchants can also choose to keep USDC in a wallet.

The connection to the Fed's change is direct. Because there's now one exam lane, banks behind processors and platforms can approve limited pilots on a normal timeline rather than getting pulled into a separate review. Merchants can actually run A/B tests efficiently, which benefits the market as a whole.

Custody is the trust layer underneath all of this. It's simply who holds and secures the digital assets. For wallets, stablecoin rewards, or savings features, the fastest path is pairing the product with a bank-grade custodian. Banks already have a checklist: keep customer assets separate from company funds, reconcile balances every day, secure the cryptographic keys, and show a tested incident plan. With one lane, banks can review that custody package inside their standard process. If a fintech arrives with those basics in place, approvals move faster and rollouts are smoother.

Distribution and implications

The issuer creates the stablecoin. The bank holds cash and treasury reserves, runs identity checks, and keeps the books straight. The fintech plugs the stablecoin into checkout or a wallet. The merchant turns it on. The consumer pays. All of it now runs through one standard bank review instead of a special track, which speeds launches up significantly.

Banks support this because more payment options can grow volume and fee income while staying inside familiar risk controls. Merchants care because they can test whether stablecoins lower their total cost or raise approval rates. Consumers notice when payments arrive faster and appreciate having the option.

The safeguards line up. The GENIUS Act requires full reserves, monthly public reports, and $1 redemptions. If an issuer fails, coin holders have first claim on the reserves. As fintech keeps growing, this governance lets banks move faster and stay accountable.