All of these factors have combined to stall deal activity, slow growth, and inspire laments of a “fintech winter.” For 2025, however, industry insiders are optimistic that the tide will turn and momentum will build around new technologies like stablecoins and that capital raisings, acquisitions and public listings will begin to accelerate.
Here are three fintech themes to watch in 2025:
Relaxed regulations
The bankruptcy of banking-as-a-service startup Synapse Financial Technologies left thousands of fintech customers without access to funds held in accounts that, in some cases, were advertised as protected by Federal Deposit Insurance Corp. The debacle set up partnerships between banks. and fintech startups in the regulatory spotlight and has accelerated a wave of coercive measures against so-called sponsor banks which partner with fintechs to allow them to offer financial products. The current administration has responded with a series of enforcement actions, proposed rule changes, and public directives.
Discover the stories that interest you
Yet even before the Synapse disaster, FDIC Chairman Martin Gruenberg had stoked the anger of policy groups like the American Fintech Council, which claimed his agency had adopted a “regulation by enforcement” approach, stifling innovation in the banking sector. Likewise, the Consumer Financial Protection Bureau has long been accused of regulatory overreach. Its recent moves have included claiming oversight of digital wallets peddled by major tech companies and investigating fintech companies including Paypal Holdings Inc., Affirm Holdings Inc., Klarna Group Plc and Afterpay from Block Inc.
All this will change under the new administration. Donald Trump’s advisers have sought to reduce or eliminate banking regulators, including the FDIC and CFPB, the Wall Street Journal reported. Elon Musk, co-leader of the Department of Government Efficiency, or DOGE, initiative, called for “Delete the CFPB” in a message Asset supports DOGE and has the power it needs to fire CFPB Director Rohit Chopra, at least. Other financial regulators expected to be replaced include the FDIC’s Gruenberg and the acting head of the Office of the Comptroller of the Currency, Michael Hsu.
“It will have an immediate impact on the tone, and you will have a relatively rapid shift in terms of the experiences that people are willing to do, the things that they think they prioritize,” said Amias Gerety, partner at QED Investors and former interim assistant. Secretary of Financial Institutions at the U.S. Department of the Treasury. “At the same time, most financial institutions are working to chart a reasonable path forward so that they do not have to significantly alter their operations when regulatory attitudes change.”
Offers, offers, offers
The rebound of publicly traded fintech companies after sharp declines from 2021 highs has fueled optimism about public listing opportunities on the horizon. The Ark Fintech Innovation ETF is up about 34% in 2024. Buy now, pay later company Klarna and neobank Chime Financial Inc. have filed for an IPO, paving the way for more other fintechs to follow suit. Stripe Inc. and Plaid Inc. are two other closely watched IPO candidates.
“You can see the fog lifting from the market,” said Matt Streisfeld, general partner at fintech investment firm Oak HC/FT. “As you head into the backend of 2025 and early 2026, you can see the public windows opening.”
Even though public market sentiment is more promising, only a handful of private fintech companies are large enough to be able to navigate the transition with confidence. Meanwhile, venture capital funding in the fintech sector has slowed back to pre-pandemic levels.
For startups that don’t want to take the plunge into the mainstream and hit a wall in private markets, acquisition by a larger player may be the most attractive route. Earlier this year, personal finance platform MoneyLion Inc. was acquired by Gen Digital Inc. for $1 billion. In 2025, investors expect to see similar deals take shape.
“The scale you need to go public – in terms of revenue and from a profitability perspective – is no longer $100 million, it’s multiples of that and many companies don’t are not there yet,” said Neil Kapur, partner at fintech investment firm TTV. Capital. “We expect to see more strategies with cash on their balance sheets come to market and be more aggressive in making acquisitions.”
Cryptocurrency payments are becoming more widespread
A month after Donald Trump’s victory in the presidential election, Bitcoin surpassed the $100,000 level for the first time, likely buoyed by the president-elect’s pro-crypto stance. Trump’s favorable attitude towards crypto extends to the fact that he himself is getting in on the action by promoting his own project, World Liberty Financial.
The new administration’s pro-crypto agenda is likely to put a damper on efforts to use technologies like stablecoins, especially for those trying to expand internationally. Payment processor Stripe’s $1.1 billion acquisition of stablecoin issuing startup Bridge, for example, was driven by a desire to build a global payments infrastructure, Stripe CEO Patrick wrote Collison, in an article announcing the agreement.
“Where stablecoins are most interesting today is in cross-border payments, particularly in or between countries considered moderate to high risk by U.S. and European financial institutions,” says Gerety of QED.
Similarly, PayPal announced this year that it would allow disbursement partners to use its own stablecoin, PYUSD, to settle cross-border transactions on its international money transfer service, Xoom. PayPal also already allows consumers to buy, hold and sell cryptocurrencies through their wallet. The problem of cross-border payments also attracts startups. YellowCard, a stable startup that has traded over $3 billion in crypto in 2024, was founded to find a way to bypass costly international wire transfers.
While early movers like Stripe and PayPal are following the crypto momentum, other players in the payments industry are waiting for the regulatory green light before making their own investments. Under the new administration, these hesitations may begin to fade.
“From where we sit today, the regulatory situation is still too murky for us to aggressively invest in stablecoin infrastructure,” said Jack Zhang, co-founder and CEO of Airwallex, a trading platform. global payment. “While stable payments are not currently a top priority for our customers, we are exploring a number of areas for product-market fit. Stablecoins have the potential to disrupt a number of cross-border use cases – such as globally distributed payroll – and we want to be there when the regulatory structure and customer demand align.