Trade Republic, the German fintech sensation, is once again facing regulatory scrutiny due to its attractive interest rate offers. A recent post by @fintech_germany on X has sparked discussions in the fintech community, suggesting that regulatory authorities may be investigating the neobank’s practices.
The Issue: Are the Interest Promises Misleading?
Trade Republic has built a strong reputation with user-friendly investing and banking services, but its high-interest rates on deposits have now drawn regulatory attention. The concern? Whether these offers fully comply with transparency requirements or if customers might be misled regarding the safety of their funds.
This is not the first time the neobank has faced criticism. In February 2025, the Consumer Protection Center of Baden-Württemberg sued Trade Republic, accusing it of misleading advertising. The dispute centered around Trade Republic’s 4% interest offer, which allegedly failed to clearly disclose that part of the deposits were placed in money market funds not covered by German deposit insurance. Media outlets like FOCUS Online, tagesschau.de, and Capital.de reported extensively on the case.
Regulatory Pressure on Neobanks is Growing
Trade Republic is not alone in facing such scrutiny. Scalable Capital, another German neobroker, was also warned by the Consumer Protection Center in February 2025 for similar non-transparent marketing of high-interest rates tied to money market funds.
This pattern suggests that regulators are now closely watching neobanks that attract customers with seemingly risk-free high-interest accounts. The big question remains: Will authorities take stricter actions to force greater transparency?
The Bigger Picture: A Fintech Dilemma
Traditional banks rarely face such disputes because their deposits are generally covered by government-backed deposit insurance. Neobanks, however, often use alternative structures like money market funds, which, while profitable, introduce risks that may not be clear to all customers.
The situation is reminiscent of past regulatory interventions in fintech, such as N26’s BaFin investigations between 2018-2019 over compliance issues. This history shows that neobanks frequently push regulatory boundaries—sometimes leading to major industry shifts.
Conclusion: A Wake-Up Call for the Fintech Industry?
With repeated regulatory concerns around high-interest offers, this latest Trade Republic case could signal tighter oversight for neobanks. The fintech industry now faces a challenge: Can they continue offering competitive rates while meeting transparency and compliance standards?
The coming weeks will determine whether this is a minor compliance check or the beginning of a broader crackdown on fintech banking models. What do you think—necessary consumer protection or regulatory overreach?