Will New U.S. Administration Skyrocket Fintechs In 2025?

For fintech startups, 2025 presents a paradox: immense opportunities paired with significant challenges.

With Trump’s return to the White House, fintech startups are bracing for a world that could transform overnight. Industry experts weigh in on what the industry needs to expect—and prepare for—to navigate these turbulent yet opportunity-rich times.

Lessons from Trump’s First Term

Back in Trump’s first term, the fintech sector saw both opportunities and curveballs. His tax cuts gave startups a breather, creating a surge in early-stage investments. However, the rollback of Dodd-Frank regulations led to more fragmented consumer protection, which kept compliance teams on their toes. This leniency raised concerns about potential systemic risks, especially with the integration of underregulated sectors like cryptocurrencies. 

While Trump’s policies favored deregulation, introducing the CFPB’s Personal Financial Data Rights Rule under Dodd-Frank remains a pivotal win. “Open banking in the United States stands at a critical juncture,” notes Pinar Ozcan, Professor of Entrepreneurship and Innovation at Oxford University. She points to the balancing act startups must play between leveraging these rights and managing compliance.

“The biggest takeaway from Trump’s last term is that volatility is the new normal,” says Vasyl Soloshchuk, CEO of INSART Fintech Startup Accelerator. “Startups must build adaptability into their DNA to weather policy pivots.”

Trump’s Economic Playbook: Boon or Bust?

Source: Reuters

The anticipated deregulatory environment under Trump 2.0 will favor banks and fintechs. New leadership at financial regulatory agencies is likely to reverse several Biden-era policies, potentially easing capital and liquidity requirements. This shift could provide fintech startups with more flexibility and growth opportunities.

However, the push for deregulation isn’t without its critics. Some experts warn that aggressive loosening of regulations could increase systemic risks, reminiscent of the pre-2008 financial crisis. The potential for instability underscores the importance of a balanced approach to policy changes.

Nigel Green, CEO of deVere Group, says Trump’s pro-business policies were a boon for corporations, driving growth in industries like tech, financials, and energy. However, with less regulation, the potential for instability always lingers.

Jesper Johansen, CEO of Northstake, emphasizes that regulatory clarity could shape fintech’s future under a second Trump term. The incoming administration has a unique opportunity to redefine crypto regulation, particularly around staking, where billions of dollars in untapped potential remain. “Once these core issues have been solved, changes are needed within the SEC to ensure that crypto is viewed as a vehicle of innovation, rather than something to be feared.”

Impact on Startups and VCs

Trump’s tax reforms could increase the cash available to venture capitalists, potentially funneling more investments into fintech startups. Vasyl believes this could mean faster scaling opportunities for U.S.-based fintech companies. “If capital becomes more accessible, the race to innovate accelerates,” he says.

Improved market conditions and deregulation under the Trump administration are driving an uptick in mergers and acquisitions (M&A) activity among financial sponsors. As new use cases emerge, AI is a key area of interest.

However, the rapid proliferation of AI regulations across industries and jurisdictions adds complexity. Failure to comply with these laws can devalue AI-focused investments. Sponsors must conduct thorough regulatory compliance assessments of potential targets, ensuring current adherence and future alignment with legal requirements for AI development and deployment.

Also, Trump’s America First policies could complicate cross-border operations. Scott Dawson, CEO of DECTA, adds that a shift in regulatory bodies under Trump’s leadership could mean an influx of low-quality players in the fintech space, intensifying competition and potentially sparking a race to the bottom. The challenge lies in balancing innovation with quality control.

Cryptocurrency and Innovation

Source: Reuters

Cryptocurrency is poised for a significant boost under Trump’s presidency. The launch of Spot Bitcoin exchange-traded funds (ETFs) in 2024 has already created new pathways for institutional capital to flow into cryptocurrency markets. Galaxy Digital projects that U.S. spot Bitcoin ETF assets under management could surpass $250 billion, with even a small allocation of the $40 trillion in U.S. retirement funds potentially driving Bitcoin prices to unprecedented heights. Geoffrey Kendrick of Standard Chartered forecasts Bitcoin could reach $200,000 by the end of 2025.

Trump’s plans to establish a strategic Bitcoin reserve using funds from criminal seizures have also stirred excitement. His administration’s emphasis on deregulation and replacing key regulatory leaders, such as SEC Chair Gary Gensler, is expected to create a friendlier environment for digital assets. However, experts like James Butterfill from CoinShares caution that unrealized promises or unexpected regulatory setbacks could lead to market corrections, with Bitcoin prices potentially falling short of bullish predictions.

Beyond Bitcoin, the cryptocurrency sector is expected to grow in areas like real-world asset tokenization and artificial intelligence integration. Platforms leveraging Ethereum’s smart contract capabilities and staking opportunities will likely attract traditional investors. US brokerage firm Bernstein predicts the stablecoin market will expand 2.5 times by 2025, driven by cross-border transactions and business-to-business payments.

Nick Jones, CEO of Zumo, highlights Trump’s perceived crypto-friendly stance as a potential catalyst for innovation. However, he warns that blockchain’s energy consumption challenges must be addressed to sustain growth. As cryptocurrency markets evolve, startups must remain agile, balancing innovation with regulatory compliance and sustainability.

AI, Embedded Finance, and Emerging Trends

Beyond crypto, startups are expected to double down on AI and embedded finance. Recently, Trump announced that OpenAI, SoftBank, and Oracle are joining forces on a $100 billion joint venture called Stargate, set to build data centers and create over 100,000 U.S. jobs, with further investments planned over the next four years. Also, Trump’s potential tax incentives for tech could accelerate AI-powered solutions like real-time fraud detection and smart lending. 

Vasyl predicts significant traction in these areas. His company, INSART, represents a startup accelerator that equips startups with the tools and strategies needed to thrive in an unpredictable environment. Participating companies receive tailored support in areas like product-market fit, compliant engineering, and go-to-market strategy—key factors for success under the expected economic shifts. One of the AI-powered startups is Couplr AI, a game-changer for insurance and wealth management that uses AI and behavioral finance to create perfect client-advisor pairings. Another is Complify, an integrated compliance management system with an AI layer inside.

Tax incentives for tech innovation might spark the emergence of new niches, potentially birthing startups we’ve yet to imagine. Meanwhile, embedded finance—seamlessly integrating financial services into non-financial platforms—opens collaborative opportunities across industries.

However, as Vice President J.D. Vance highlighted earlier, AI’s rapid growth carries safety concerns. “On the flip side of it, I also worry that that legitimate concern is justifying some overregulation or some preemptive overregulation attempts that would frankly entrench the tech incumbents that we already have and make it harder for new entrants to create the innovation that’s going to sort of power the next generation of American growth and American job creation,” he stated. So, startups must find a delicate balance while implementing AI’s transformation.

The Road Ahead

The 2025 fintech scene is shaping up to be anything but boring. Vasyl’s message to startups is clear: “Don’t just react to policies; anticipate them. Build flexibility into your roadmap, stay laser-focused on customer needs, and never underestimate the power of a well-prepared compliance team.”

Vasyl Soloshchuk , CEO of INSART, a fintech business accelerator that leads next-gen transformation in the financial services industry. Vasyl is a tech entrepreneur and investor with 20 years of experience in scaling startups and delivering impactful software solutions.