James Kim, leader of Troutman Pepper Locke’s Fintech Industry Group, was quoted in the February 26, 2025 Banking Dive article, “Colorado, Virginia Legislation Would Impact Fintech Lending.”

Though it is common for states to have usury limits, which have been around for hundreds of years, the Colorado law and the Virginia legislation aim to tackle the same issue: the explosion of lending that involves banks partnering with fintechs to offer loans via the internet, according to James Kim, a partner at Troutman Pepper Locke. 

Both laws could negatively affect fintechs and banks, particularly in Virginia, where subprime borrowers may be excluded from loans, he pointed out.

“The more recent trend is trying to extend the coverage of the usury cap to cover new, innovative products typically offered by or through fintechs, where a bank in Utah partnering with a fintech in New York or California can lend to a borrower in Colorado or Virginia,” Kim said. “And then the question is, do you have to follow a usury limit in Colorado or Virginia?”

The two states are trying to address a similar issue in different ways, he noted, adding that some states, including Colorado, are trying to close the “loophole” that allows fintechs to evade the usury limit.

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Kim explained that the FDIC’s withdrawal of its amicus brief filed last April is driven by leadership change. It’s a clear signal of support for the banking industry and a return to the FDIC’s original position from 1992, the only other time the FDIC was involved in litigation related to this issue, Kim said.

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The FDIC’s previous position, which Kim said was inconsistent with its past stance, led to criticism during oral arguments. The key dispute revolves around where a loan is “made” in the internet age. While Colorado argues that loans are made where the borrower is physically located, banks argue loans are made where the bank is located, and where employees, decision-making and fund disbursement originate, Kim noted.

“They took the pro-bank position back in 1992; so when they filed the amicus brief, they flip-flopped their position,” said Kim, representing all the state banking associations in the Colorado law case. “I think it’s driven by leadership, but I just think that they’re returning to their original position. It’s not a new position.”

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The “anti-evasion” provisions target banking-as-a-service and fintech-bank partnership programs where banks technically make the loans while the fintechs market and operationalize the loans. In most cases, the products are white-labeled under the fintech’s name, Kim said.