PwC Report: Regulation is Setting the Stage for Fintech and Traditional Bank Competition
Forget the old guard versus the new kids on the block. The real financial showdown is being scripted by regulators.
The Rulebook Rewrite
Global watchdogs are finally laying down the law—clearer frameworks, digital asset classifications, and open banking mandates. It's not about stifling innovation anymore; it's about defining the playing field. Fintechs get the legitimacy they've craved. Traditional banks get a roadmap for what they can—and can't—block.
Armed and Operational
This isn't theoretical. With rules in place, fintechs are launching products that directly attack banking's profit centers—payments, lending, wealth management. They're leveraging agile tech stacks to bypass legacy systems that move at the speed of, well, a committee meeting. Meanwhile, banks are scrambling to build or buy their way into the digital age, often with the compliance department leading the charge.
The Customer Wins (For Now)
Competition breeds better products and lower costs. Users get seamless cross-border payments, decentralized finance (DeFi) yield opportunities, and asset tokenization—services once locked behind mahogany doors. The friction is melting away, provided you ignore the 50-page terms of service and the occasional 'innovative' fee restructure.
The Final Tally
Regulation has stopped being a barrier and started being the starter's pistol. The race is on for customer primacy in a hybrid financial world. The ultimate irony? The very rules designed to protect the old system are now the catalyst for its most profound transformation. Just don't expect anyone on Wall Street or in Silicon Valley to admit they needed permission to play nice.
What the regulatory environment will look like in 2026?
According to the report, the global regulatory environment in 2026 will be defined less by debate on regulatory practices and more by execution and competition between jurisdictions as they vie for capital and legitimacy.
The report identified trends that highlight cross-border coordination as regulators align in their desires to improve international market integrity, prevent financial crimes and protect investors.
In the report, Matt Blumenfeld, PwC’s global and US head of digital assets, pointed out that “Global regulatory collaborative momentum is accelerating,” which is encouraging the pace at which institutions are adopting cryptocurrency.
“Regulation is no longer a constraint; it’s actively reshaping markets and enabling digital assets to become the architecture that allows them to scale responsibly,” he said. “This collaboration aims to foster SAFE innovation and interoperability in the global digital finance ecosystem.”
This shift means different things for crypto firms, which fall under the fintech banner, and traditional institutions like banks. For the crypto firms, it could mean higher compliance costs but also more clarity, which could encourage innovation, unlock banking access as well as deeper institutional participation.
As things stand, various countries are at different stages of regulatory practices. For example, the EU is more concerned with the continued implementation of MiCAR and DORA, while in the US, regulation has taken a pro-innovation outlook thanks to Acts like GENIUS and CLARITY.
The EU is also getting ready to introduce the digital euro, a MOVE that directly contradicts the US’s stance, which leans towards stablecoins. The POTUS is greatly and vocally opposed to CBDCs.
Meanwhile, in India, regulators have remained cautious about the digital assets space and most of their moves have been geared towards enforcement of anti-money laundering practices and taxation rather than a full-on licensing regime.
US banks and fintech firms at loggerheads over yields
The US has expressed a desire to become the crypto capital of the world and has become an undisputed trend setter where crypto regulation is concerned. However, regulators have been stuck in place for some time because incumbents are doing their best to limit what fintechs linked to crypto can do.
While legislators are working hard to break down the wall between crypto and tradfi, banks in the country are mounting pressure on Congress in a bid to narrow how stablecoins earn returns and how financial data is shared.
The American Bankers Association’s (ABA) 2026 policy priorities have demanded that payment stablecoins not be allowed to pay yield as it could trigger capital flight. They also want a revision of the open banking rules to promote what they describe as consumer protection and competitive balance.
The fintech industry has been resisting this mandate, with the likes of Coinbase even going as far as withdrawing support of the CLARITY Act, with claims that the banks are trying to limit crypto wallets, stablecoin issuers and fintech apps from reaching users at such a pivotal moment.
Ultimately, banks hope that by tightening the rules around stablecoin yield or restricting it entirely and reshaping how open banking is implemented, crypto’s integration into the financial system will only happen on bank-defined terms.
This blueprint ensures the bank’s interests are protected, but critics linked to the crypto fintechs claim those interests are no longer sustainable and that it is time to move ahead.
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