Especially as the rights of LGBTQ+ Americans hang in the balance, fintechs—and other businesses—have to pay close attention to legal developments that may determine how they interact with consumers and governments alike.

A complex matrix of regulations already affects LGBTQ-focused fintech operations, with other developments certainly in the pipeline.

KYC

Regulators require fintechs and other finance-oriented companies to collect relevant information about their customers during onboarding. Beyond date of birth, address, and name, this process also may require ID-verification that corroborates the information provided for the other fields. This process risks being especially complicated for LGBTQ+ people who have changed their names, face housing insecurity, or have lost access to documentation.

According to the ACLU, 55% of trans people in the US lack any official ID that matches their identity. In part, this is because the process of updating identification can be a burdensome process. Texas, for example, requires a court order for the gender on a driver’s license or birth certificate to be updated. It will continue to be difficult to make the KYC process fully automated and seamless—without the help of sensitivity-trained onboarding specialists—as long as these hurdles remain.

Anti-discrimination statutes

A patchwork of anti-discrimination laws governs how LGBTQ+ people find housing and navigate employment. These laws range significantly in their scope and effectiveness—with some states enacting a comprehensive anti-discrimination layer to protect LGBTQ+ people from harassment, and other states letting employers and property owners refuse to hire or house people based on their gender identity and sexual orientation.

While fintechs should do so regardless of the states in which they work, compliance teams should keep state and municipal anti-discrimination policies in mind, especially fintechs that deal with housing (e.g. mortgages and rent assistance).

Privacy laws

US state governments have passed 80 anti-trans bills so far this year, with 372 bills still active. These laws have banned access to healthcare, legal recognition, and public assembly; this wave of legislation represents a worrying trend. And the legal stakes are high for trans people and professionals supporting them alike: Oklahoma, for example, has made it a felony to provide gender-affirming care to people under 26 years of age.

Fintechs may soon be forced to decide how to respond to this legislation. Will they provide payments receipts for states investigating trans people and their medical teams? How do these laws conflict with federal statutes? Bigger FIs will most likely face this crossroads more decisively and frequently than smaller fintech counterparts—but preparing for these contingencies may make sense regardless.