USA - Nationwide: A Financial Services Regulation: Banking (Compliance) Overview

The US Regulatory Framework

The US bank regulatory framework is shaped by several key features that distinguish it from those of most other jurisdictions, including: (i) a “dual charter” system that allows banks to be licensed under either federal or state law; (ii) a longstanding policy of separating banking from other commercial activities, implemented in part through extensive regulation of bank holding companies (BHCs) under the Bank Holding Company Act of 1956 (BHCA); (iii) the allocation of supervisory authority across multiple federal and state prudential and market regulators; and (iv) with respect to both domestic US banks and foreign (non-US) banks that maintain US operations, substantial direct and indirect regulation of certain activities even outside the United States. As a result, US bank regulation is often more fragmented, institution-specific, and extraterritorial in its application than in many other jurisdictions.

While these structural features generally go back decades (or longer), the US regulatory and supervisory framework has been shaped more recently by laws and regulations adopted in the wake of the 2007-2008 global financial crisis, most notably the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Dodd-Frank Act sought to reduce systemic risk, strengthen the safety and soundness of large financial institutions, and enhance consumer and investor protection, including through heightened prudential regulation and stress testing for large banking organisations, resolution planning and orderly liquidation authority for failing systemic firms, expanded derivatives regulation, new restrictions on proprietary trading and private fund activities under the “Volcker Rule”, and the creation of a new Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Act also fundamentally shifted US bank regulation away from a primary focus on the safety and soundness of individual institutions to a broader focus on financial stability and systemic risk oversight, while significantly increasing supervisory expectations, capital and liquidity requirements, and regulatory scrutiny of large and interconnected firms.

Recent Shifts and a Look Ahead

Since assuming office in January 2025, President Trump has installed new leadership across the federal financial regulatory agencies, including at the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). While the administration has, for the most part, refrained from attempting to make fundamental changes to the US bank regulatory framework or reverse key features of the Dodd-Frank Act, the federal banking agencies have undertaken significant new policy initiatives and broken with prior supervisory priorities in several key areas.

Fintech, crypto and digital assets

Perhaps the most prominent shift in financial regulatory policy under the Trump administration has been in the area of crypto and digital assets, including the ability of US banks and BHCs to engage in digital assets activities and the ability of nonbank payments companies and other fintech firms to access certain “bank” or “bank-like” charters and privileges, bringing them into more direct competition with traditional banks.

Almost immediately upon taking office, federal bank regulators under the Trump administration rescinded legacy supervisory restrictions on the ability of banks and BHCs to engage in digital assets activities, which has facilitated rapid expansion by these firms in areas such as crypto and digital asset custody, tokenisation, crypto-based lending, and payments and stablecoin activities. At the same time, the Trump administration and the OCC have taken several steps to actively promote (and ultimately approve) use of the limited purpose national trust company charter (formerly reserved for traditional trust and fiduciary businesses) by non-bank payments companies and other firms with technology-driven business models. More recently, in May 2026, President Trump issued an executive order aimed at providing non-bank financial companies with access to the Federal Reserve’s payment rails, and the Federal Reserve proposed to establish a new special purpose payment account that would allow institutions not eligible for full-service “master accounts” – such as non-bank payments companies, fintechs, and crypto firms – to clear and settle payments directly through the Federal Reserve’s payments infrastructure without needing to obtain a bank charter.

Alongside these regulatory and supervisory developments, the US Congress has established the first elements of a comprehensive framework for the regulation of stablecoins in the United States, with the Guiding and Establishing National Innovation for US Stablecoins Act (the “GENIUS Act”), which was signed into law by President Trump on 18 July 2025. Rulemaking to implement the GENIUS Act is expected to command substantial attention from US regulators in the coming months. The Digital Asset Market Clarity Act (the “CLARITY Act”), a complementary piece of legislation directed more broadly at establishing a comprehensive US market infrastructure for crypto and digital assets, continues to make its way through Congress.

Enhancements to the bank supervisory framework

Returning to a prominent theme from the first Trump administration, the US bank regulators under the current administration have emphasised a common goal of increasing transparency in regulatory and supervisory policies and reforming the US supervisory framework in ways that are, broadly speaking, incrementally more industry friendly – for example, by reducing supervisory hurdles for certain activities, streamlining application review processes, eliminating so-called reputational risk as a potential basis for supervisory criticism, and refocusing examiner attention away from technical compliance issues to a narrower focus on matters that might realistically have material financial impacts on regulated institutions.

A new era in enforcement

In addition to relaxing certain aspects of the bank supervisory and examination framework, the Trump administration has dramatically curtailed enforcement activity of the federal bank regulators as well as market regulators like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This shift generally has not been implemented through statutory changes or rulemaking, but through leadership appointments, resource reductions, shifts in supervisory priorities, and the withdrawal or narrowing of pending investigations and litigation. The most dramatic example has been the CFPB, where new leadership largely halted the opening of new investigations, sought substantial workforce and budget reductions, dismissed or settled numerous pending enforcement matters, and curtailed its supervisory activity, effectively rendering the CFPB and its enforcement function dormant and undoing a key consumer protection element of the Dodd-Frank Act.

Basel III endgame re-proposal

In the area of regulatory capital requirements, the US federal bank regulators in March 2026 issued a significantly revised re-proposal to implement the Basel III “Endgame”, rescinding an initial proposal from 2023 that had been heavily criticised by market participants. The revised proposal retains the core objective of implementing the Basel Committee’s 2017 Basel III reforms but includes several significant changes from the 2023 proposal, including narrowing the scope of the “expanded risk-based approach” primarily to Category I and II firms (ie, the very largest banks), creating a separate revised standardised approach for other banking organisations, revising the G-SIB surcharge framework, and reducing or eliminating several aspects of perceived US “gold plating” in the 2023 proposal. As a result, the revised proposal is expected to be materially less punitive than the 2023 version and, therefore, less likely to drive significant balance-sheet contraction, pricing changes, or migration of activities outside the banking sector. While no implementation date has been finalised, a final rule is currently expected sometime in 2027 with multi-year phase-ins thereafter.