Large banks make it more difficult and more expensive for consumers to use Fintech and Crypto applications, which is equivalent to what could be considered “Operation Chokepoint 3.0”.
It is according to Alex Rampell, general partner of the venture capital company Andreessen Horowitz (A16Z). In his latest Fintech newsletter, Rampell pointed out that traditional financial institutions invoiced high costs to access account data or move money, in particular to services like Coinbase or Robinhood, to get a blow to strangle the competition.
“Under the Biden administration, the ChokePoint 2.0 operation tried to uncheck and move the crypto,” said Rampell. “This era is finished, but now the banks aim to implement their own gokepoint 3.0 – invoice incredibly high fees to access data or move money to Crypto and Fintech applications – and, more worrying, blocking the crypto and fintech applications they don’t like,” he added.
Chokepoint 2.0 specifically refers to the debanning of Crypto companies and managers due to the pressure exerted during the administration of President Joe Biden by regulatory authorities such as the Federal Deposit Insurance Corp (FDIC). After Donald Trump was elected American president, the ChokePoint 2.0 ended while the regulators reversed numerous directives set up during the previous administration.
JPMorgan accusation
Jpmorgan Chase, one of the largest American banks, was distinguished as an example.
Under the current American law, in particular article 1033 of the Dodd-Frank law, consumers have the right to access their own financial data.
But banks now assert control of how this data is delivered electronically, billing for the costs for access to information as basic as routing and account numbers.
The executive of A16Z argued that such tactics could make transfer funds on more expensive alternative platforms, dissuade users and reduce competition.
“If it suddenly costs $ 10 to move $ 100 in a cryptographic account,” wrote Rampell, “maybe fewer people will do it. And if JPM and others can prevent consumers from connecting their own cryptography and fintech applications freely chosen from their bank accounts, they effectively eliminate competition.”
Rampell’s words echo those of the co-founder of Gemini, Tyler Winklevoss, who said that JPMorgan was invoicing Fintech platforms for access to customer bank data “would power”. “This is the kind of blatant regulatory capture that kills innovation, hurts the American consumer and is bad for America.”
Read more: Winklevoss claims that JPMorgan stopped integration of gemini after access to critical data
JPMorgan did not directly approach the platform, but addressed criticism. The Bank told Forbes that nearly 2 billion monthly data data requests came from third parties and that in chargeing, it aims to limit misuse.
Rampell, on the other hand, calls on the Trump administration to stop such practices by banks before becoming standard among other financial institutions.
“In a perfect world, consumers would vote with their wallets. But each bank will probably do that, and get a new banking charter takes years. Many banks have hostages, not customers,” said Rampell.
“We do not need a new law; we just need the administration to prevent this insensitive and manipulative attempt from killing competition and the choice of consumers,” he added.
