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 Happy Monday, Fintech Takers! A friend of mine recently shared with me the Japanese concept of Shinrin-yoku, which literally translates to “forest bathing.” It was coined in 1982 by Tomohide Akiyama, who was the director of the Japanese Ministry of Agriculture, Forestry and Fisheries. He believed (as many scientific studies have suggested) that spending time in a natural environment (particularly a forest) provides significant therapeutic benefits. He developed the concept as a response to the increasing urbanization and technological advancements in Japan, with the hopes of inspiring the Japanese public to reconnect with nature within Japan and protect the forests. I think the 2026 internet shorthand for this same idea is “touching grass,” though I will admit to liking the term “forest bathing” much better. Regardless, given the onslaught of negative news headlines that we all have to deal with these days (including in today’s newsletter … sorry in advance!), it feels like an increasingly essential practice. - Alex P.S. Most companies that fail at embedded payments fail for one of two reasons. They pour so much into regulatory infrastructure that it becomes unsustainable. Or they underinvest, and a fraud or compliance event they can't recover from finds them first. Ron Griswold (WEX) has watched both play out more times than he can count. This is the last chance to hear how you can avoid becoming either one. Was this email forwarded to you? Sponsored by Plaid Welcome to the first installment of Uncovering the Credit Blind Spot, where each month, I'll pull on a different thread of the cash flow data lenders need to make smarter credit calls.  And 45 million Americans carry too little credit history to register at all. The borrower changed but the model didn't.  Forêt de Compiègne (1885) by Berthe Morisot. 3 FINTECH NEWS STORIES#1: The OCC Failed Its Own TestWhat happened?World Liberty Trust has received preliminary conditional approval for a national trust bank charter:
So what?We’ve known this decision was coming since the charter application was submitted on January 5th, 2026. And, if we’re being honest with ourselves, we’ve known what the decision was going to be that entire time. In case you are unfamiliar with WLF, allow me to get you up to speed. Here is a partial timeline of the past two years:
Again, to be clear, this is a partial list of things that have reportedly happened (or been adjacent) to World Liberty Financial over the past two years. I didn’t have the space to include the whole Justin Sun saga (an initial $75 million investment in WLFI, a dropped SEC investigation, a governance dispute, and lawsuits), nor any details about the UAE-based crypto fund Aqua 1 (which reportedly purchased $100M of WLFI and is reportedly linked to Guren "Bobby" Zhou, a businessman who was arrested in Britain in 2021 on suspicion of money laundering). Ohh, and also, since WLFI began trading in September 2025, its price has fallen roughly 80% and now trades near six cents. So, you know, some stuff has happened! What I’m curious about is how curious the OCC has been, since January, about all of these pieces of information. As the agency made clear in its denial of Wise’s national trust bank charter application — filed in June 2025 and denied in July 2026 — the demonstrated competence (or lack thereof) of bank organizers to operate a national trust bank and comply with all applicable regulations is critical. It’s worth digging in a little more on the Wise charter rejection, because it’s the closest comp for the World Liberty Trust decision. According to the OCC, Wise’s plan to have its national trust bank rely on the company's existing compliance operation was concerning because the company had just paid $4.2 million to settle state claims that it failed to investigate and report suspicious transactions in its capacity as a state-licensed money transmitter. Separately, the agency found the proposed directors and executives short on experience in both things the bank would have to do well: Policing illicit money, and running a trust business, which means holding other people's assets under a legal duty to act in their interest. However, the key thing to notice about these concerns is that they weren’t directed exclusively at the bank that Wise applied to open. Wise National Trust (WNT) didn't exist yet. It had no compliance record, no enforcement history, no track record of any kind. Every failing the OCC identified belonged to the parent and its affiliates; the settlement, the continuing noncompliance, the missing fiduciary experience, the organizers themselves, who the OCC noted were not bystanders to the problems at Wise's US arm but part of them. The agency was explicit that it was judging the whole company, and it was explicit about why:
This is very sensible of the OCC! And note that the agency was careful to say the enforcement actions against Wise were "important to, but do not ultimately control" its decision. The consent order wasn't the disqualifier. What mattered was whether the people organizing the bank had demonstrated they could be trusted to run one. What’s weird is that, in responding to public comments on World Liberty Trust’s charter application (none of which appear to have been filed by bank trade associations, even though they have otherwise been vociferous critics of national trust bank charters for crypto companies … weird!), the OCC inverted its own logic:
The OCC’s argument is essentially that World Liberty Trust is the company that applied for the charter. So — even though World Liberty Trust is planning to take over the issuance and reserve management for one of World Liberty Financial’s flagship products (USD1) and World Liberty Trust’s Organizer, Director, and President (Zachary Witkoff) is also the co-founder and CEO of World Liberty Financial (and neither he nor any of the bank's four other directors has run a national bank trust department or operated under Part 9, the OCC's rulebook for handling assets you hold on someone else's behalf) — the OCC considers concerns about World Liberty Financial (and its owners, investors, and other affiliates) to be outside its scope. You can argue (and I, personally, would) that the OCC should have denied World Liberty Trust’s national trust bank charter application solely because of the unprecedented nature of President Trump’s involvement, the obvious conflicts of interest his involvement creates for the OCC and other regulatory agencies, and the damage those agencies’ institutional credibility will suffer because of those conflicts of interest. However, even if you disagree with that and believe that everyone has a right to be fairly evaluated for a national trust bank charter, it’s difficult to look at the conflicting logic between the Wise rejection and the World Liberty Trust conditional approval and not feel like the OCC just failed its own test. #2: What is FinCEN Doing?What happened?Speaking of regulators doing odd things, FinCEN just issued a final rule:
So what?Treasury Secretary Scott Bessent hailed the rule as a win for U.S. small business owners:
The “without compromising national security” part is not a given. A recent report from the Government Accountability Office found that U.S. shell companies pose significant illicit finance risk and state records on company formation don't always capture real ownership information. The Corporate Transparency Act was intended to address this state-level reporting gap and help law enforcement agencies crack down on money laundering. FinCEN’s decision to exempt U.S. citizens from the beneficial ownership reporting removes 99% of the companies from the requirement, making the rule a significant departure from what Congress intended (as multiple people who served in Congress at the time have stated). The “eliminating a burdensome reporting requirement for millions of law-abiding business owners” part is also suspect. FinCEN estimated that the first-year compliance costs for businesses under the rule was $21.7 billion and that removing the requirement would save businesses roughly $9 billion and 91.5 million hours a year. That sounds like a lot, but you need to put those numbers in context. There are more than 30 million businesses that were subject to this requirement. For those with simple ownership structures (which is the vast majority), it translated into about 90 minutes of time and less than $100 during incorporation, with no annual filing (updates were required only when ownership actually changed). Additionally, Secretary Bessent’s desire to help American small business owners apparently doesn’t extend to the financial services industry. The Independent Community Bankers of America states on its own website, regarding the Bank Secrecy Act:
That is exactly what the Corporate Transparency Act was intended to do. Banks have been required since 2018 to collect beneficial ownership information from every business customer that opens an account with them. The CTA was supposed to make that collection unnecessary: Companies would report once to the government and banks would (eventually) be able to check the government's database. Congress wrote into the statute that Treasury had to revise FinCEN’s customer due diligence rule to strip out the work that centralized reporting was going to render duplicative. That never happened. Immediately after the CTA requirement went into effect, it ran into legal challenges. And now FinCEN has descoped 99% of covered entities from having to comply with the rule, leaving banks — still subject to customer due diligence requirements — holding the bag. At least for the next few years (or intervention from the courts) banks will be the only ones collecting this information, and they (and law enforcement agencies) will be without a centralized database to check each others’ work against. You can argue (and I, personally, would) that our entire approach to fighting money laundering is pathetically inept and that we should be open to radically different ideas for how to win that fight. However, even if you think our existing rules and processes around AML are significantly flawed, it’s difficult to look at this rule from FinCEN as a step in the right direction. Especially when you consider that, as a part of finalizing the rule, FinCEN has also decided to delete U.S. person records from the existing (non-public) database of beneficial ownership information collected under the CTA, which, once it’s done, is an action that won’t be able to be undone by the courts or a future administration. #3: Sports Betting = InvestingWhat happened?I’m sorry to end on even more depressing news stories, but this survey from Betterment came out recently:
And, in related news, Apex partnered with Kalshi:
So what?Sadly, this is all very predictable. Kalshi finds a way to legally offer bets on a wide variety of real-world events (including sports) nationwide, to anyone over the age of 18. Kalshi partners with Robinhood and Coinbase to make these bets available to their users, who skew younger and more risk-on. Robinhood and Coinbase figure out that it’s much more profitable to build their own CFTC-compliant infrastructure to offer event contracts rather than continuing to rely on Kalshi and they start making investments in that area (Robinhood’s investments in event contracts are already paying off handsomely). Kalshi begins to migrate its distribution partnership strategy down lower into the stack, integrating with brokerage-as-a-service providers like DriveWealth and now Apex. Apex is a big get. It is the backend partner behind the investment offerings of many prominent consumer fintech brands including Public, Webull, Stash, tastytrade, and (most recently) Cash App. Obviously none of those brands are obligated to offer CFTC-compliant sports bets to their customers, although some like Webull and tastytrade already do. I hope the ones that don’t (Cash App especially) are responsible enough in their product roadmap decisions to consider such an idea absurd. However, consumer surveys like Betterment’s 2026 Retail Investor Survey are making the equation “sports betting = investing” look less absurd and more inevitable. The usual caveats apply — the survey was conducted over the internet and only reached 1,000 U.S. consumers total — but the result I highlighted above is still scary. Here’s an additional finding from the survey, which reinforces the notion that the kids are not alright:
These findings — again, based on a sample of only a couple hundred Gen Zers at most — are shocking, but they aren’t surprising. When someone presents stock market investing and sports betting as comparable products, side-by-side in an app that’s ostensibly designed to help you manage your money and build wealth, you will naturally think of them as fungible products. Sponsored by Rain Settlement runs on bank time. 2 READING RECOMMENDATIONS#1: Open Banking: Letting Banks Charge for Access to Data Most Likely to Yield Market Benefits (by Solveig Singleton, Cato Institute) 📚I have less faith in the benefits of an unencumbered free market than the folks at Cato do. However, I still found this argument on the merits of allowing banks to charge for open banking data interesting. #2: ‘We are not ready’: AI could trigger bank runs in seconds, lawmaker says (Banking Dive)📚Really interesting interview. I’m glad someone in Congress is thinking about these risks. *Bonus: Know Your Agent: A New Problem for Old Defenses (by me, with Persona) 💻When an AI agent gets it wrong, nobody's settled who eats that cost: is it the consumer, the retailer, or the bank? I talked it through with experts from Persona, Lithic, and Glenbrook Partners, plus what agents should be allowed to do in the first place. Watch now on-demand. 1 QUESTION FROM FINITYThere are a TON of interesting questions being asked in Finity (our digital community for fintech and banking nerds). I’ll share one question, sourced from the community, each week. However, if you’d like to join the conversation, please apply to join! If I was to write about an unsolved problem that sits at the intersection of healthcare and fintech, what specific problem would you want me to choose? If you have any thoughts on this question, reply to this email or DM me in Finity! (In Finity ... Infinity ... get it? ... OK, sorry, I'll show myself out!) Thanks for the read! Let me know what you thought by replying back to this email. — Alex | ||||||||
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