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In fintech, enforcement was once the biggest constraint. Now, its absence might be the biggest risk.
Federal regulators are pulling back — lawsuits dropped, rules relaxed, priorities reshuffled. For some, that looks like freedom. But for seasoned litigators like Matthew G. Lindenbaum, it signals something else entirely: uncertainty disguised as opportunity.
As head of Nelson Mullins’ Boston litigation team and co-chair of its securities and sanctions practices, Lindenbaum has spent decades advising clients at the edge of financial innovation. Crypto, AI, data infrastructure — these are fast-moving sectors. But the legal system wasn’t built for speed. It was built to last.
And that, he argues, is the mistake many fintech founders make. The law doesn’t vanish when enforcement slows. Cases may disappear from the headlines, but the frameworks — some of them nearly a century old — still hold.
In this exclusive conversation, we explore what happens when regulation stalls, why AI needs stricter controls than startups may expect, and how fintech firms should prepare for courtroom battles in a space now likened to the Wild West.
Enjoy the full interview!
1. You’ve built your career navigating the intersection of regulation and innovation. How have major shifts in government enforcement over the years personally shaped your approach as a legal strategist?
The biggest shift in government enforcement priority that I have ever seen is taking place right now in the Trump administration—which is exercising more directed control of enforcement across a variety of federal agencies—than any other administration in recent memory, including the first Trump administration.
For example, despite the SEC’s reputation for being aggressively anti-crypto during Gary Gensler’s tenure at the top of the SEC during the Biden administration, Gensler largely followed the example set by his predecessor, Jay Clayton, during Trump’s first term. The abandonment of so many crypto-related SEC enforcement actions during the new administration is really unprecedented. It has created an incentive for defendants and targeted companies to play for time and that is the strategy that everyone is following now.
The only other example I can recall that created such a sea change was when the SEC stopped granting preemptive waivers of the bad actor tag as part of settlements. That change made it much more difficult to settle cases with the Staff, because the bad actor tag would make raising capital much more difficult for settling parties. But this latest enforcement abandonment in the second Trump administration is the biggest I have ever seen.
2. With the recent turn toward reduced federal oversight, how does your professional experience guide your understanding of what risks are being overlooked — or newly created — in fintech?
That’s a great question, and I think this is a situation where counsel can add a great deal of value to Fintech companies or really any commercial enterprise. Here the key thing to keep in mind is that even though the federal government has taken a step back from enforcement of the law across a variety of industries and areas, the laws themselves have not changed.
The definition of “security” has not changed. The Foreign Corrupt Practices Act has not been repealed even if the government is (temporarily) not enforcing it. It is foolish, in my opinion, to rely on a relaxed enforcement environment and to assume that things won’t change again—I guarantee you, they will. That is the key risk to control for right now—do not assume that this relaxed enforcement environment is permanent.
3. AI is now part of every conversation in fintech. From your legal perspective, how do you personally approach the tension between innovation and accountability when advising clients working at the edge of new technology?
Here I like to analogize how lawyers and just everyday people work with AI, when I advise clients on the topic. First, you have to keep in mind that we all have been working with AI for years now—we just haven’t referred to it as such. When you are running a google search or your phone is automatically correcting your typing, that is an example of AI already fully integrated in our lives.
Second, you need to use AI prudently. Those autocorrects are often way off. You would not send a text or an email simply relying on those autocorrects—instead you need to double check them to make sure you are saying what you want to say. That is the same way you should approach more innovative AI.
Sure—you should look for ways to integrate AI tools into your Fintech business—but you should not blindly rely on them. You need to have a system in place to double check. In the legal profession we have seen some unfortunate examples where lawyers used AI tools to find case law to support their points, included the AI-generated citations in their briefs, and then filed them in court without double-checking to make sure the citation is correct.
Unfortunately, in some instances, the AI tools have completely invented or hallucinated cases. This has not gone well for the lawyers who did not double-check those case sites. FinTech companies need to follow the same approach. Look for ways to take advantage of AI’s promise for greater efficiency—but make sure you have logical controls in place.
4. You've worked across both emerging tech and traditional finance. How do you personally assess which legal frameworks still apply — and which ones need to evolve — as tools like AI and crypto reconfigure the landscape?
Financial technology has the potential to transform the way we interact with money in our every day lives. It promises greater efficiency and in some ways the democratization of finance. At the same time, we need to keep in mind that despite all of this promise, ALL of the legal frameworks still apply.
The federal courts apply a Supreme Court decision about orange groves from the 1940s when deciding whether a crypto asset is a security. That’s the point—our laws and legal frameworks are meant to be universally applicable. They are meant to apply to new industries and to innovators in current industries.
Until Congress changes the laws—and with the thin majorities and gridlock in Congress that has become typical the last 10-15 years, that is a rare occurrence—you have to assume that the old laws and frameworks apply. Contracts, torts, and administrative law apply to AI and crypto just the same as they do to everything else.
5. The competition for data center resources is a new dimension in fintech’s evolution. How have you seen this shift impact the kinds of legal or compliance questions clients bring to you?
It’s like 1849 and this is the data center goldrush. And the analogy fits as some of the competition for those resources feels like the wild west in terms of sharp conduct and disputes. I have written a piece about how the rise of crypto mirrors in some ways the rise of the wild west frontier community in the show Deadwood, and the competition for data center resources very much fits in that world.
This presents less of a unique set of compliance questions and more of a premium on being able to go into court and be willing to do hand-to-hand legal combat in emergency hearings, TROs, injunctions and that sort of thing. Fintech companies in the data center space need to have lawyers ready to litigate and ready to do so on a moment’s notice. This space is so fast moving, the lawyers need to be too.
6. When working in fast-moving industries under shifting regulatory philosophies, what principles or instincts have you developed to help guide clients through uncertainty?
It may be a bit cliché, but at the end of the day, I try to be a solution architect for my clients. There are two ways that lawyers can go wrong in my experience in fast-moving industries: (1) they refuse to say no to ideas from the business that they should know cannot fly, legally, or (2) they become a “Dr. No,” and shoot down innovation without offering creative solutions. Neither one of those approaches serves dynamic clients well. Our job is to offer creative solutions—“no you can’t do it this way, but have you considered . . .” That sort of thing.
7. For legal professionals and fintech practitioners just entering the field today, what habits or perspectives would you recommend developing to stay sharp and ethically grounded as the rules keep changing?
Don’t try to be a Fintech lawyer, just try to be a good lawyer. That, to me, is the most important thing. Understanding Fintech, crypto, and AI is the easy part—it’s kind of the fun part. The hard part is learning how to write a good brief, how to make an effective argument, how to depose or cross-examine a witness, how to advise your client on a challenging problem. If you have a solid set of skills, look out for what is best for your clients, and work hard to deliver them results, then you should be successful in the Fintech realm or any other.
