Large banks make it more difficult and more expensive for consumers to use Fintech and Crypto applications, which is equivalent to “Chokepoint 3.0 operation”.
This is according to Alex Rampell, general partner of venture capital firm Andreessen Horowitz (A16Z). In the latest Fintech NewsletterRambel notes that traditional financial institutions charge high fees to access account data or move funds to services such as Coinbase or Robinhood to kill competition.
“The Chokepoint 2.0 action under the Biden administration attempted to revoke and list cryptocurrencies,” Rampell said. “That era is over, but now banks are aiming to implement their own Chokepoint 3.0, charging crazy high fees to access data or transfer funds to Crypto and Fintech Apps – and more worrying, they don’t like blocking cryptocurrency and fintech apps.”
Chokepoint 2.0 It refers to the pressure exerted by President Joe Biden in the presidential administration, such as the Federal Sopeed Insurance Corp, during the presidential period, which refers to the withdrawal of cryptocurrency operations and executives. (FDIC). Chokepoint 2.0 ended when regulators reversed many of the directives laid out during the previous administration after Donald Trump was elected as U.S. president.
JPMorgan Chase allegations
JPMorgan Chase is one of the largest banks in the United States and is listed as an example.
Under current U.S. law, especially Section 1033 of the Dodd-Frank Act, consumers have the right to access their financial data.
However, banks are now advocating how to transfer that data electronically, sometimes charging fees to get basic information like routes and accounts.
A16Z executives believe this strategy could make money transferred to alternative platforms more expensive, blocking users and reducing competition.
“If the sudden transfer of $100 to a crypto account is $10, maybe fewer people will do that. If JPM and others can prevent consumers from connecting their own free choice of cryptocurrency and Fintech apps to their bank accounts, they will effectively eliminate the competition.”
Rampell’s words echoed the words of Gemini co-founder Tyler Winklevoss, who said JPMorgan charges fintech platforms to access customer banking data and will “bank” them. “It’s a serious regulatory capture that kills innovation, hurts American consumers and is unfavorable to the United States.”
Read more: Winklevoss claims JPMorgan stops Gemini after criticism of data access fees
JPMorgan hasn’t addressed the platform directly, but it does address criticism. The bank told Forbes The nearly 2 billion monthly requirement for this user data comes from third parties and it is charged to curb abuse.
Meanwhile, Rampell called on the Trump administration to stop this practice before banks become the standard for other financial institutions.
“In a perfect world, consumers will vote with their wallets. But every bank may do that, and it will take years to get a new bank charter. Many banks have hostages, not customers,” Rampell said.
He added: “We don’t need new laws; we just need governments to prevent such ruthless attempts from killing competition and consumer choices.”
