For years, UK-based consumer finance and payments firms have viewed the U.S. regulatory landscape as complex, fragmented, and challenging when it comes to expansion. But 2025 may prove to be a turning point. The new Trump administration is ushering in a broad deregulatory shift in Washington and rolling back aggressive rulemaking and enforcement trends that characterized the Biden years. The U.S. financial services market—already the largest and most lucrative in the world—is now poised to become even more business-friendly, especially for providers of cryptocurrency and digital asset services.
While federal regulatory pressure may be easing, expansion into the U.S. market still requires considerable diligence and planning. The dust has yet to settle on deregulation at the federal level, state-level oversight remains robust, and U.S. litigation risk—especially from private lawsuits—continues to be an important consideration. And for UK firms accustomed to a single, centralized regulator like the Financial Conduct Authority (FCA), navigating federal law, and the state-by-state patchwork of licensing and enforcement, can still be a challenge.
Taken together, these new changes are providing a moment of opportunity for UK firms that have been hesitant to enter the U.S. market. For those interested in exploring this opportunity, this article highlights key considerations and regulatory developments that will need to be addressed for any successful expansion across the pond.
1. A Federal Regulatory Climate That's Finally Favorable to Business
Under the previous administration, the Consumer Financial Protection Bureau (CFPB) and other federal agencies were actively expanding their regulatory footprint, pushing aggressive rulemakings, broadening interpretations of UDAAP (unfair, deceptive, or abusive acts or practices), and targeting emerging sectors like Buy Now, Pay Later (BNPL) and digital payments. There was also the "debanking" issue impacting the ability of innovative companies to access the banking system. Now, those priorities are shifting.
The Trump administration (with the help of Congress) has already commenced or is expected to initiate the following actions:
- Pullback on the CFPB's most aggressive regulatory expansions. Rulemakings initiated under Biden's CFPB, including those related to overdraft fees, credit card late fees, digital payments, and non-bank registration, are likely to be revisited—or outright reversed.
- Curtail the "debanking" agenda. Under Biden, financial regulators scrutinized banking relationships with industries like fintech, crypto, and even legal but politically sensitive sectors. Expect a shift toward neutral, risk-based banking policies rather than broad-based exclusions driven by "reputational" risk.
- Adopt a pro-innovation stance on cryptocurrency and digital assets. The U.S. approach to crypto under Biden was largely enforcement-driven, with regulatory focus toward digital assets. That's expected to change, with clearer, more business-friendly rules on stablecoins, payments, and blockchain technologies.
- Ease regulatory pressure on small-dollar lending and non-bank financial services. The CFPB's approach to payday lending, installment loans, and fintech credit products has been highly restrictive. That's expected to loosen, making the U.S. market more welcoming to UK firms offering alternative credit products.
2. State-Level Compliance: Still a Factor, but Manageable
While the federal regulatory environment is improving, the U.S. maintains a dual system of federal and state oversight. Unlike the UK's FCA-centric model, financial services firms in the U.S. must contend with a patchwork of state laws, particularly for licensing and consumer protection.
UK firms considering U.S. expansion should be aware of:
- State licensing requirements. Non-bank financial firms, including payments providers, lenders, and fintechs, may need money transmission, lending, or brokering licenses in multiple states, depending on the scope of their activities. For example, a UK payments firm might require money transmitter licenses (MTLs) in dozens of states. Obtaining state licenses can be a complex and time-consuming process, and typically requires the disclosure of a significant amount of information about the applicant, its business, and its owners.
- Aggressive state regulators. Some states, particularly California (via the DFPI) and New York (via the NYDFS), act as mini-CFPBs, enforcing their own consumer protection laws. But others are adopting more business-friendly stances, creating opportunities for market entry.
- Usury and rate caps. Some states impose interest rate limits on certain credit products, which can impact business models for UK lenders looking to expand into the United States.
Banking-as-a-Service (BaaS). In the U.S., structuring financial products under a "banking-as-a-service" model can sometimes serve as a workaround to some state financial services regulations, allowing companies to operate under a bank partner's regulatory umbrella rather than obtaining their own licenses or as many licenses—though state requirements may still apply, depending on the specific activities and structure.
While state compliance remains a reality, the good news is that the federal government is unlikely to push for new layers of regulation. Instead, the new administration has promoted or will be expected to promote regulatory clarity, making it easier for firms to navigate the state-federal balance. Depending on the business model, it may also be possible to bypass certain or all state regulatory requirements or, at least, the more onerous ones.
3. Role of Regulators and Private Litigation: The Hidden Regulatory Threat
One of the biggest differences between the UK and U.S. markets is the role of private litigation. While the FCA primarily drives regulation and enforcement in the UK, the U.S. legal system allows consumers—and their lawyers—to act as private enforcers of financial regulations.
Key litigation risks include:
- Class action lawsuits. U.S. law firms actively pursue claims under statutes like the federal Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA). These lawsuits can result in massive settlements, even when firms believe they've complied with the law.
- State consumer protection statutes. Many states have laws that allow consumers to sue over allegedly unfair or deceptive practices. Some, like California's Unfair Competition Law, allow lawsuits even when no actual harm has occurred.
- Arbitration agreements. Many U.S. firms use arbitration clauses to limit exposure to class actions. While some private plaintiffs and states have challenged these clauses, federal courts have generally upheld them, making well-drafted and implemented arbitration clauses an essential tool for managing legal risk.
For UK firms entering the U.S., litigation risk should be factored into compliance and operational planning. The right contractual protections and dispute resolution mechanisms can make a significant difference.
4. A Market That Rewards the Right Strategy
Risk is not the issue, while unmitigated risk can be a problem, whether now or in the event of a regulatory snapback. The U.S. financial services market remains one of the most dynamic in the world, and with the current shift toward deregulation, the barriers to entry may be lower than in recent years.
For UK firms, the key takeaways are:
- The federal landscape is improving. The new administration is rolling back aggressive rulemaking, easing regulatory burdens, and taking a pro-business stance.
- State-level requirements still exist, but they are manageable. With the right licensing and compliance strategy, firms can navigate state-by-state obligations effectively.
- Regulatory and litigation risk remains real, but proactive planning mitigates exposure. Understanding the legal landscape and right-sizing compliance and U.S. private rights of action—and using arbitration where possible—can help firms avoid costly legal battles.
Now is the time for UK-based financial services firms to take a fresh look at the U.S. market. The regulatory climate is shifting in their favor, making expansion more attractive than it has been in years. With the right strategy, firms can seize new opportunities while managing the complexities of the U.S. system.
