How the housing bill quietly helps out fintech, crypto

This legislative update could fundamentally change how your fintech lending partners handle cash. A small provision in a new federal housing bill clarifies how 'custodial deposits' are treated by the FDIC. For retailers and operators, this means the financial apps and BNPL platforms you use to facilitate customer sales will have a much easier time securing their funding sources. Previously, there was significant legal grey area regarding whether money held by a tech company on behalf of a user was fully insured. This led to instability and higher costs for non-bank lenders. By streamlining these rules, the bill reduces the risk that your financing partner could face a liquidity crisis. It also paves the way for fintechs to offer more robust 'wallet' features to your customers. For the average merchant, this doesn’t require an immediate change in strategy. However, it does signal a more stable environment for the alternative payment providers you likely rely on. If your lending partners are more secure, they are less likely to suddenly tighten credit requirements or pull out of the market during a banking hiccup. It essentially adds a layer of 'plumbing' security to the digital finance ecosystem.

Source: American Banker — Top News

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