Large banks make it harder and more expensive for consumers to use Fintech and Crypto apps that are similar to what could be seen as “Operation Chokepoint 3.0.”
That’s according to Alex Rampell, General Partner at Venture Capital Firm andseessen Horowitz (A16Z). In his latest fintech newsletter, Rampell pointed to traditional financial institutions that charged high fees to access account data or move money, especially for services such as Coinbase or Robinhood, as a step to stifle competition.
“During the Biden -Administration, Operation CHOKPOINT 2.0 tried to declare and deplatform crypto,” Rampell said. “This era has ended, but now the banks are aiming to implement their own Chokepoint 3.0 – charging insanely high fees to access data or move money to crypto and fintech apps – and more regarding blocking crypto and fintech apps they do not like,” he added.
Chokepoint 2.0 specifically refers to the degradation of cryptic businesses and leaders as a result of pressure exerted under President Joe Bid’s administration of regulatory authorities such as Federal Deposit Insurance Corp (FDIC). After Donald Trump was elected to the US president, Chokepoint 2.0 ended when regulators turned many of the directives introduced under the previous administration.
JPMorgan -Relief
JPMorgan Chase, one of the largest US banks, was appointed as an example.
According to the current US law, specific section 1033 of the Dodd-Frank Act, consumers have the right to access their own financial data.
But banks now claim control over how this data is delivered electronically, sometimes charging fees for access to information as basic as routing and account numbers.
A16Z’s director claimed that such tactics could make the transfer of funds to alternative platforms more expensive, discourage users and reduce competition.
“If it suddenly costs $ 10 to move $ 100 to a crypto account,” Rampell wrote, “maybe fewer people will do it. And if JPM and others can block consumers from connecting their own freely selected crypto and fintech apps to their bank accounts, they effectively remove competition.”
Rampell’s words repeat themselves from Gemini co-founder Tyler Winklevoss, who said JPMorgan charges fintech platforms for access to customer bank data will “bankruptcy”. “This is the kind of creepy legislative capture that kills innovation, harms the American consumer and is bad for America.”
Read more: Winklevoss claims JPMorgan stopped Gemini Onboarding after criticism of criticism
JPMorgan has not addressed the platform directly but dealt with the criticism. The bank told Forbes that nearly 2 billion monthly requests for user data come from third parties and that by charging fees it aims to limit abuse.
Rampell, meanwhile, urges Trump administration to stop such practices at the banks before becoming standard among the rest of the financial institutions.
“In a perfect world, consumers would vote with their wallets. But every bank is likely to do this and to get a new bank charter taking years. Many banks have hostages, not customers,” Rampell said.
“We don’t need a new law; we just need administration to prevent this creepy and manipulative attempt to kill competition and choice of consumer,” he added.
