K-STREET, 10,000 FEET: What's next for CFPB Rule 1033?

THE LOWDOWN:

• Crypto Week is over, but industry heavyweights aren’t done with crypto policy — and one little-known regulation is dividing banking experts, with many of President Donald Trump’s closest allies lining up against some of the biggest banks in the world.

• John Czwartacki, a former CFPB official, explained that without Rule 1033, the recently-passed bipartisan GENIUS Act is just “a car with no gas.” He added that abandoning open banking now would undermine the GENIUS Act’s promise.

• Czwartacki is not alone. Senior Trump administration officials, including David Sacks — the Chair of the President's Council of Advisors on Science and Technology — warn that moves to roll back the rule are “concerning.”

• On the other side is JP Morgan Chase, which announced it will require new fees for fintech companies like Plaid, Venmo, Rocket, and others to access customer data for those wanting to use their platforms.

Crypto Week is over, but industry heavyweights aren’t done with crypto policy — and one little-known regulation is dividing banking experts, with many of President Donald Trump’s closest allies lining up against some of the biggest banks in the world.

The Consumer Financial Protection Bureau’s (CFPB) Rule 1033, dubbed the “Open Banking Rule,” began under Trump‘s first administration, and it gives consumers the ability to control their own data so that they can use tools like Venmo, Coinbase, Robin Hood, and others for banking, investing, and financial transactions.

Now, some advocates are pressuring the CFPB to vacate the rule entirely, while some CFPB alums warn this could undercut Trump’s pro-crypto legislative agenda, which saw bills like the GENIUS Act pass last week.

John Czwartacki, a former CFPB official, explained that without Rule 1033, the recently-passed bipartisan GENIUS Act is just “a car with no gas.” He added that abandoning open banking now would undermine the GENIUS Act’s promise.

Czwartacki is not alone. Senior Trump administration officials, including David Sacks — the Chair of the President's Council of Advisors on Science and Technology — warn that moves to roll back the rule are “concerning.”

Sacks, who also works as Trump’s Crypto Czar, was joined by Tyler Winklevoss, a leading crypto investor, in sounding the alarm. Winklevoss expressed concerns that “JPMorgan and the banksters are trying to kill fintech and crypto companies. They want to take away your right to access your banking data for free via-third party apps like Plaid and instead charge you and fintechs exorbitant fees to access your data.”

“As of today, the ‘Open Banking Rule’ developed pursuant to Section 1033 of the Consumer Financial Protection Act gives you the right to access your banking data via 3rd party apps,” Winklevoss explained. “The banksters are suing the CFPB to vacate the Open Banking Rule and end the open banking era. This is the kind of egregious regulatory capture that kills innovation, hurts the American consumer, and is bad for America.”

Winklevoss warned that this policy could “bankrupt fintechs that help you link your bank accounts to crypto companies like Gemini, Coinbase, and Kraken.” Winklevoss has a powerful ally in making that claim; Donald Trump Jr. said Winklevoss’s concerns are “well said.”

Consumer protection experts like Will Hild of Consumers Research point out that while open banking rules may be valuable for consumers, a number of larger banks have been less supportive of it. “With the rise of fintechs, traditional big banks, like JPMorgan Chase, have seen their stranglehold over the financial system begin unravel,” Hild said. “They've tried to use a myriad of measures to either buy, block or crush new market entrants, that they've found themselves unable to compete with or control.”

On the other side is JP Morgan Chase, which announced it will require new fees for fintech companies like Plaid, Venmo, Rocket, and others to access customer data for those wanting to use their platforms.

Melissa Feldsher, Chase’s head of payments, explained her company’s rationale. “This free access has led to excessive data pulls by aggregators, putting consumer data at risk and undermining the security and trust we strive to maintain,” she noted. “In fact, monthly API calls to Chase's secure platform by aggregators have more than doubled in just the last two years to nearly 2 billion — that’s a jump of over 1 billion more calls per month.”

“If we want secure data practices for consumers, we need data middlemen to treat customer data — and access to that data — responsibly,” Feldsher continued.

Predictably, financial innovators, crypto advocates, and lawmakers reacted immediately — and not all negatively.

“No amount of belly aching will change the fact, though, that the bank has a right — and is right — to charge for data access,” Ron Shevlin wrote in Forbes. Shevlin, who called JMPC’s move “brilliant,” added that “Chase’s decision to charge fintechs isn’t a data rights issues, it won’t hold back American innovation, and it isn’t going to harm families the financial system is meant to serve.”

On the other hand, some critics note that the biggest opponents of open banking are the same actors who have been engaged in the most egregious cases of “debanking,“ or taking away access to banking based on one’s political beliefs.

This practice began and earnest during the Obama administration, when the Obama Department of Justice launched a program called “Operation Chokepoint” which required banks to consider political pressures when evaluating the risk of lending to certain groups. Banks used that guidance to go after gun sellers, conservative groups, and anyone the left politically disagreed with.

Silicon Valley entrepreneur Alex Rampell called JPMC’s new fees “Operation Chokepoint 3.0,” allegations that banks like JPMC have strenuously pushed back on in the past.

Rampell noted that “under the Biden administration, Operation Chokepoint 2.0 tried to debank and deplatform crypto. That era has ended, but now the banks are about to implement their own Chokepoint 3.0 — charging insanely high fees to access data or move money to crypto and fintech apps, and more concerningly blocking crypto and fintech apps they don’t like.”

Rampell described the specific threat to consumers: “If it suddenly costs $10 to move $100 into a Coinbase or Robinhood account — maybe fewer people will do it. Or if it costs $10 to get a cheaper loan from a fintech, maybe you’ll be forced to take a crappier one by JPM. And maybe JPM and others will just refuse to let consumers connect their own freely chosen crypto and fintech apps to their bank account.”

Hild has already brought the issue to the attention of the Federal Trade Commission (FTC), noting the anti-competitive behavior. “A clear case of a market dominant entity leveraging their power to crush competition and preserve power,” Hild explained. “We all know JPMorgan, as the largest member of the cartel, is always the first mover — but the other members of the cartel will soon follow, if this is allowed to stand.”