The Impact of Bank Fees on Fintech Competition Contracts Fintech Sector (July 2025 Fintech Newsletter)
In a historic move, the White House recently signed the GENIUS Act, providing clear rules for stablecoins and marking a significant milestone for the crypto and open money infrastructure sectors. However, a different battle is brewing in the financial world, as traditional banks impose high fees and block access to services for crypto and fintech companies. This new phase, dubbed Chokepoint 3.0, is causing concern among industry observers and startups alike.
JPMorgan Chase, one of the banks involved in this tactic, has recently halted the re-onboarding of the crypto exchange Gemini. The move followed public criticism by Gemini's co-founder, Tyler Winklevoss, who accused the bank of charging exorbitant data access fees and attempting to stifle the growth of fintech and crypto companies by making it prohibitively expensive or impossible for fintech apps to access customer banking data through services like Plaid.
This strategy is understood as an attempt to strangle competition from fintechs and crypto platforms. Banks justify these fees as measures to curb data misuse and protect consumers, but critics argue they are anti-competitive and unfairly target fintechs. In some cases, banks charge for basic data like account and routing numbers, information that is publicly available on paper checks but now monetized when accessed electronically.
The regulatory environment, initially influenced by the Biden administration, has contributed to this issue. During Operation ChokePoint 2.0, some crypto-friendly banks failed or were pressured to sever ties with crypto firms. Although this official policy phase has ended, banks are continuing similar tactics under the guise of fee structures and selective blocking.
The fallout from Chokepoint 3.0 could lead to fewer people using crypto and fintech apps or taking more expensive loans from traditional banks. Fintechs face the risk of bankruptcy, and consumers may experience reduced choice and stifled innovation.
Meanwhile, the culture of building tech in-house is shifting, with traditional banks showing increased openness to adopting external AI tools. Startups like Revolut, Figure, and Xero are making strategic moves, entering new markets and considering public listings. Starling Bank, for instance, is exploring the acquisition of a nationally chartered U.S. bank and considering a potential listing on the NYSE as part of its expansion plans.
Dodd-Frank Section 1033 guarantees that consumers have rights to their data, and it's the CFPB's job to enforce this. The ongoing debate around data rights and the impact of Chokepoint 3.0 on competition and consumer choice remains a crucial issue for regulators and the industry to address.
References:
- The Information
- Coindesk
- TechCrunch
- American Banker
- The ongoing tactic of banks halting services to fintech and crypto companies, known as Chokepoint 3.0, has sparked debates about its potential impact on competition and consumer choice in the industry.
- Contrasting with their actions towards fintech and crypto companies, traditional banks are increasingly open to adopting external AI tools, showing a shift in their approach to technology.
- In response to Chokepoint 3.0 and the ongoing debates about data rights, regulators and the industry are under pressure to address the crucial issue of consumer rights to their financial data, as guaranteed by Dodd-Frank Section 1033 and enforced by the Consumer Financial Protection Bureau (CFPB).
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