Is the banking industry sounding the clarion call for an offensive against the cryptocurrency industry?
Author: Wenser, Odaily Planet Daily
The dispute between traditional financial giants and crypto platforms is staged again, and the protagonists this time are two industry giants from the United States – one is JPMorgan Chase, known as the “leader of investment banks”; the other is the old cryptocurrency exchange Gemini. At about 2 a.m. on July 26, Beijing time, Gemini co-founder Tyler Winklevosspublished angrily accusing JPMorgan Chase of refusing to provide data services to Gemini because of his previous remarks, attempting to use this to engage in unfair competition and stifle financial technology companies and crypto platforms. As soon as the news came out, many people in the crypto industry once again recalled the blow to crypto companies by the “Operation ChokePoint 2.0” action. Odaily Planet Daily will briefly sort out Gemini’s “Financial Persecution 2.0” in this article for readers’ reference.
Gemini is “choked” by JPMorgan again: When bank data becomes a competitive tool
As the intersection of traditional finance and the cryptocurrency industry, user data has always been the top priority of traditional banks and crypto platforms. After all, the more comprehensive the KYC information is, the more corresponding protection settings will be set for user risk preferences, asset size and even security levels, the clearer the user portrait will be, and the more convenient the platform business will be.
The focus of the dispute between Gemini and JPMorgan this time is bank data.
Just as Musk used the platform API interface as one of the sources of profit after taking over Twitter, and Reddit also charged clients and third parties for accessing platform data, the “data business” has always been part of the platform economy with unclear ownership. After Gemini co-founder Tyler Winklevoss criticized on July 20 that “JPMorgan Chase deprived Gemini of the right to access bank data for free through the third-party platform Plaid, and instead charged fintech companies high data access fees”, JPMorgan Chase, as a top US bank, naturally stopped being polite and directly issued a “death notice” to Gemini, saying that – “After revoking Gemini’s customer qualifications in the ‘Opration ChokePoint 2.0’ action, it has once again suspended the plan to reaccept Gemini as a customer.”
Undoubtedly, just like the previous “Operation ChokePoint 2.0” action in which Bank of America refused to provide banking financial services to some cryptocurrency companies and start-up technology companies, JPMorgan Chase’s operation this time is still a unilateral oppression of the encryption platform by the traditional financial giant. At this point, we need to briefly review this “industry persecution” that makes people turn pale.
Revisiting “Operation ChokePoint 2.0”: The “Crypto Suffocation Operation” initiated by the banking industry
In 2023, affected by the crypto winter and their own bad business, several crypto-friendly banks including Silicon Valley Bank, Silvergate and Signature Bank went bankrupt one after another. Some industry insiders pointed out that this move may be affected by the Biden administration’s pressure on banks to cut off business ties with cryptocurrency companies.
After that, the “Operation Chokepoint 2.0” action gradually surfaced from the dark.
Marc Andreessen, founder of a16z, once broke the news on the Joe Rogan Experience podcast: “Operation Chokepoint 2.0 is mainly aimed at political enemies of the government and unpopular start-up technology companies. In the past four years, the bank accounts of more than 30 founders of technology companies have been closed. Obviously, this is not an isolated case.” This matter was later forwarded and shared by Musk.
In December 2022, after business communication with JPMorgan Chase, Frax Finance founder Sam Kazemian also responded: “Although the suspected operation has not been confirmed, participants in the crypto industry face many challenges in ensuring the security of banking services.”
Specifically, the bank’s “refusal of service” behavior often has no clear reason, but the consequences are often extremely serious. Affected companies are unable to open bank accounts at the least, and fund transfers are restricted at the worst. Some even face a survival crisis. In front of the banking industry that the modern financial system cannot avoid, both companies and individuals are like ants, unable to resist its tough financial hegemony.
It is worth mentioning that this action also laid the groundwork for Trump’s coming to power – according to a16z founder Marc Andreessen: “This is why we ultimately support Trump. We can’t live in a world where a completely legal company is sanctioned by the US government due to improper regulatory procedures.”
On March 7 this year, Trump publicly stated at the White House Crypto Summit that he would end Operation Chokepoint 2.0’s attack on the crypto industry, which was regarded as a phased end to the “financial persecution” during the Biden administration.
JPM’s off-the-plate trick: using data business to bypass the “US Consumer Financial Protection Act”
Another focus of the dispute between Gemini and JPM is the “Consumer Financial Protection Act” mentioned by Gemini co-founder Tyler Winklevoss.
In 2024, based on a dormant legal power enacted by the U.S. Congress in 2010, the U.S. Consumer Financial Protection Bureau (CFPB) issued the “Final Rule on Personal Financial Data Rights”, which requires financial institutions, credit card issuers and other financial providers to unlock personal financial data at the request of consumers and transfer it to another service provider free of charge, ensuring that consumers can access and share data related to bank accounts, credit cards, mobile wallets, payment applications and other financial products (including access or authorization of third parties to access transaction information, account balance information, information required to initiate payments, upcoming bill information and basic account verification information, etc.). It also clearly states: “Financial service providers must provide this information free of charge.”
The move was intended to reduce loan costs and improve customer service in the payment, credit and banking markets by promoting competition and consumer choice, but it objectively prompted platforms such as cryptocurrency exchanges to have free access to user bank data and other information. And now, JPMorgan’s solution is, “Want user data? Sure, pay for it!”
The Wall Street Journal previously published an article
On the other hand, as a member of the vested interest group, bankers are still working to sue the U.S. Consumer Financial Protection Bureau (CFPB), hoping to abolish the “open banking rules” mentioned above, end the open banking era, and indirectly curb the development of cryptocurrency platforms.
There is no doubt that this is not the first time that the U.S. banking industry will not be the last time to show malice towards the cryptocurrency industry. Recently, the American Bankers Association and other banking and credit union industry organizations jointly requested the U.S. Office of the Comptroller of the Currency (OCC) to suspend the review of banking license applications from crypto companies such as Circle, Ripple and Fidelity Digital Assets on the grounds that “these applications lack transparency, fail to meet public review standards, and pose serious legal risks to the banking system.”
Cryptobank Custodia Bank founder Caitlin Long posted a statement stating that the question of whether a trust license can be used as a de facto bank license (including lending + obtaining a Fed master account) when it only accounts for 10-15% of the bank’s capital requirements is likely to enter legal proceedings. But she also pointed out: “The reaction of the banking association to the protest is very interesting. If the situation they are worried about eventually becomes a reality, why don’t banks directly transform into trust companies and continue to operate existing businesses with much lower capital requirements and supervision?”
Alexander Grieve, head of government affairs at venture capital firm Paradigm, said in response to the joint letter: “Banks and credit unions rarely agree on most issues. But they all seem to agree on one point: They will finally face substantial competition from the crypto industry.“
Conclusion: The war between the banking industry and crypto platforms has already begun
No matter how the “user data” dispute between Gemini and JPMorgan ends, there is no doubt that the war between the banking industry and cryptocurrency platforms has moved from the dark to the light. After the passage of the Stablecoin Act, the CLARITY Act, and the Anti-CBDC Surveillance State Act, the competition between the two in cross-border payments, daily life, commercial acceptance, etc. is bound to enter a white-hot stage. By then, will the banking industry continue to bully the crypto platforms, or will the crypto platforms overthrow the banking industry? The outcome of this dispute may still depend on Trump’s thunderous measures.
Source: panewslab.com
