The FS Vector team had a busy start of summer, successfully co-hosting multiple events from discussing AI in Financial Services with Aprio at their new office in the Empire State Building to a blockchain-themed fireside chat with AON talking about Annelise Osbourne’s new book “From Hoodies to Suits” in New York City. With summer in full swing, let’s jump into the stories that are shaping the industry. 

The CFPB finalized a rule defining qualifications for industry standard-setting bodies related to the upcoming Personal Financial Data Rights Rule. This aims to promote open banking by ensuring fair, transparent, and inclusive standard-setting processes. The rule sparked discussions about the potential role of the Financial Data Exchange (FDX) as the recognized standard-setting organization, while the CFPB also reserved the right to participate in standard-setting activities. 

The FDIC released a consumer bulletin on the risks associated with banking with third-party apps, emphasizing that nonbank companies are not FDIC-insured. Synapse’s partner bank, Evolve Bank, has been issued a cease and desist order by the Federal Reserve. The consent order limits the bank’s fintech partnership activities, with any new partnerships requiring regulatory approval. Compounding these regulatory challenges, Evolve confirmed a cyberattack by the Russian-linked hacker group LockBit 3.0, resulting in customer data being posted on the dark web. In response to the breach, Evolve stated that the incident is contained and they are actively cooperating with law enforcement authorities to investigate the situation.

Meanwhile, Connecticut is attracting fintechs with a novel “innovation bank charter,” offering regulation without requiring federally insured deposits. This initiative aims to boost economic growth and establish the state as a fintech hub. Several other states, including Wyoming, Nebraska, Georgia, and Vermont, have similarly novel charters or other regulatory innovations that expand the go-to-market options beyond bank partnership and state licensing. FS Vector Partner, Emily Goodman covered this topic on the fintech panel she moderated at last month’s CT Tech Week, noting “at our firm we’ve seen a tremendous uptick recently in interest on these novel state bank charters. There is excitement from the fintech industry as well as support from the state banking regulators. The strategic go-to-market analysis for fintechs now includes state charter route, in addition to bank partnership and state licensing.”

Entrepreneur Greg Kidd finalized his investment in Vast Bank for $53 million. Vast Bank was the first U.S. banking institution to let customers buy, sell, and hold cryptocurrencies. It entered a consent order with the OCC back in November 2023 and subsequently exited the cryptocurrency market in February. 

On the acquisition front, Robinhood is acquiring cryptocurrency exchange Bitstamp for $200 million, its largest deal to date. This move expands Robinhood’s digital asset offerings, which drove its first-quarter profits with crypto trading volume up 224% from year ago. Robinhood is positioned to compete with major crypto exchanges like Binance and Coinbase. Bitstamp holds over 50 licenses and registrations globally.

In tech news, only a year after launching its buy now, pay later service, Apple is ending Apple Pay Later, which allowed consumers to split purchases into four payments. Apple is no longer offering new loans, but existing loans are not affected. Instead, Apple is partnering with Affirm to offer loans when customers check out with Apple Pay. In another announcement during its Worldwide Developers Conference (WWDC), Apple unveiled Tap to Cash in its upcoming iOS 18 update, allowing users to pay by tapping together two iPhones.