- JPMorgan is at the forefront of strangling crypto through data charges.
- Expensive fintech and crypto platforms do not attract users.
- Anti-competitive behavior in the banking industry had to be halted.
Once again, big banks in the United States are putting the noose around the crypto companies. Following the demise of the Biden-era crackdown dubbed Operation Chokepoint 2.0, banks unleashed a more subdued offensive: they carried out what has come to be known as Chokepoint 3.0.
This new approach comes with high charges on money transfer or data access, and it specifically targets crypto and fintech applications.
Andreessen Horowitz (a16z) partner Alex Rampell discloses that large firms such as JPMorgan Chase are overcharging for basic banking services.
Even simple information, such as the account and routing numbers, has huge costs attached to it when it is delivered in electronic form.
How Banks Weaponize Fees to Strangle Crypto
This isn’t about revenue growth. It’s a coordinated effort to suffocate competition. A fee of $10 to transfer $100 to a platform such as Coinbase or Robinhood creates another obstacle that most small users cannot cover. Rampell cautions that it will make adoption chilly and drive customers back to the large banks solely.
The new policies have been set at JPMorgan against the fintechs that depend on access to the banking data of customers. The bank asserts that fees are necessary to prevent abuse, but critics cite such action as anti-competitive rent-seeking that will drive smaller institutions out of business.
Gemini co-founder Tyler Winklevoss has labeled the strategy as egregious regulatory capture that is detrimental to both innovation and consumers.
History Repeats: From Debanking to Data Blocking
Operation Chokepoint 2.0, advanced by the Biden administration, forced the banks to deny crypto business accounts. The direct censorship is no longer there, yet a16z claims that the struggle went underground.
The banks now reject or block fintech applications they do not like, or charge ones that they do like exorbitant fees to access systems that have been traditionally free or low in cost.
Rampell points out that consumers under the Dodd-Frank Section 1033 theoretically have rights to their bank information. Nevertheless, banks take advantage of legal gray areas to gain control over the flow of data and increase prices, thus effectively reducing the choice of customers in practice.
Customers are at the mercy of big banks that make it almost impossible to switch charters because the regulations are complex.
Rampell urges the incumbent government to step in and save the competitive environment. His message: we don’t need any new laws, we merely have to enforce against these behind-the-scenes anti-competitive schemes.
