SCOOP: Crypto community cautions on upcoming CFPB ruling
Inside the latest on Rule 1033 from the CFPB.
Last week, the Consumer Financial Protection Bureau (CFPB) concluded the open comment period for Rule 1033 — the Open Banking Rule that establishes how consumers access their own banking information between banks, fintechs, and crypto platforms.
As rumors have percolated that the CFPB is considering including fees in their new rule, crypto leaders in and outside of Congress are raising major alarm bells on this issue, which has been covered extensively by the Washington Reporter.
Sen. Cynthia Lummis (R., Wyo.), one of the Senate’s strongest advocates for crypto and digital currency, wrote to the CFPB to caution against excesses from banks, which she noted have included crippling fees and debanking.
“Large banks have shown they’ll restrict access for political reasons, targeting industries and individuals they disagree with, including gun manufacturers, digital assets, churches, and even President Trump,” Lummis wrote. “We cannot empower the opponents of digital assets to rewrite the rules in their favor, stifle innovation, and increase costs. Throwing up barriers would drive entrepreneurs overseas and weaken America’s leadership in financial technology.”
In a similar vein, Utah’s Attorney General, Derek Brown, wrote to the CFPB expressing concerns that these fees could crush crypto and the financial tools and technology his constituents use every day. “I firmly believe that debanking means both access to banking services but also access to the banking tools Utah families like, whether they be for payments, investing, financial planning, or any other purpose. And exorbitant fees constitute moats or barriers to block innovation and stifle competition,” Brown explained.
Likewise, Tyler and Cameron Winklevoss — two of the most prolific crypto investors — submitted a comment to the CFPB that allowing fees would “allow the country’s largest financial institutions to limit consumer freedom.” They argued in their comment that allowing banks to impose restricting fees would crush innovation, giving entrenched incumbents “a substantial leg up on their nascent competitors.”
Some former CFPB officials agreed with these assessments; John Czwartacki, the agency’s former Chief Communications Officer, published an op-ed in the Washington Examiner which explained that getting the open banking rule right is critical to accomplishing President Donald Trump’s stated goals of making America “the global capital of financial technology and crypto.”
Czwartacki added that one of the top priorities for his former CFPB colleagues writing the rule should be “protecting competition: Fintech companies must be free to serve consumers without fear of punitive bank fees or gatekeeping.”
The Crypto Council for Innovation wrote in its comment that “consumers should be able to access and port the standardized collection of their own account data without fees…As a legal matter, Section 1033 is clear. It requires that covered financial institutions ‘shall’ make consumers’ financial data available to them ‘upon request.’ This language does not contemplate the imposition of any conditions, such as fees, on consumers’ right to access their financial data, once they have requested it. As a policy matter, permitting financial institutions to charge fees would stifle competition by advantaging incumbents over new entrants, including in the Web ecosystem.”
A group of crypto and fintech trade associations, including the Financial Technology Association, the Blockchain Association, the National Retail Federation, and several others, wrote that the proposed fees are an “attack” on Americans’ rights and freedom. They add that those fees “create a barrier to entry for innovative competitors and limiting options for consumers.”
While the open banking rule is a very complex regulatory policy, the rulemaking process and comment period has brought to light the impact it will have across industries and across the entire economy. All eyes are on CFPB as they work to finalize this and balance the complex demands involved by wide-ranging groups of stakeholders.