Building and launching a FinTech in the United States is a far more intricate and regulated process than many presume. Unlike in Europe, where financial licenses can be “passported” across borders, the U.S. operates a dual regulatory system—federal and state-based—that requires fintechs to navigate a patchwork of licensing requirements.

In this episode of ATP, Trevor Tanifum, Managing Principal at FS Vector, discusses some of the challenges of launching a FinTech in the U.S., particularly if one is trying to enter from Europe.

Some of the topics that Trevor covered in detail include:

• Unlike the European Union’s passporting model, U.S. FinTechs must often secure individual licenses in every state they intend to operate, making compliance a heavy lift from day one.
• Attempting to self-license—acquiring the necessary state-by-state permissions without partnering with a bank—is a daunting path and can be fatal to early-stage companies running on limited capital and short timelines.
• Because self-licensing is so burdensome, many fintechs turn to bank partnerships. But these relationships are not easy to come by either for many reasons.
• One of the most surprising insights Trevor shared is that the U.S. consumer, unlike their counterparts in Asia or Europe, doesn’t prioritize fast payments. This is due in part to the prevalence of credit.
• If traditional FinTechs face a thicket of rules, crypto and Web3 companies often face a vacuum. There's no comprehensive regulatory framework for digital assets in the U.S. which leaves companies vulnerable without clear guidance.