U.S. Banks Use High Fees to Curb Crypto and Fintech Competition

Large U.S. banks are reportedly deploying a new strategy, dubbed “Chokepoint 3.0,” to curb competition from crypto and fintech platforms by imposing high fees and limiting access to essential services, according to Alex Rampell, a general partner at Andreessen Horowitz (a16z) [1]. This move builds on earlier efforts such as the Biden administration’s “Chokepoint 2.0,” which saw banks denying crypto firms access to traditional banking services. Now, the approach has shifted underground, relying on excessive fees and restrictive access policies to dissuade users from adopting alternative financial platforms [1].

Rampell notes that banks such as JPMorgan Chase are now charging steep fees for basic services, including data access and money transfers, effectively making it unattractive or impractical for users to transfer funds to crypto or fintech platforms [1]. For instance, a $10 charge for transferring $100 is cited as a significant barrier for many consumers, making traditional banks the more appealing option [1]. The strategy is further compounded by efforts to block fintech applications from accessing banking data, limiting customers’ ability to use digital financial tools [1].

Critics argue that these tactics amount to anti-competitive behavior. Tyler Winklevoss, co-founder of Gemini, has condemned the approach as an example of regulatory capture that harms both innovation and consumer interests [1]. Similarly, Ripple CTO David Schwartz described the strategies as “rent-seeking behavior” and “despicable evil,” emphasizing that they suppress competition without due process [1]. Such actions, according to critics, bypass transparency and regulatory oversight, creating a financial environment where smaller players are effectively excluded [1].

The issue has also drawn regulatory attention. The White House’s Digital Assets Working Group recently released a report titled “The Golden Age of Crypto,” which advocates for greater collaboration between traditional financial institutions and the crypto industry [1]. The report outlines pathways for crypto adoption and suggests that addressing entry barriers could foster a more inclusive financial system [1].

Rampell has called for enforcement of existing laws, particularly the Dodd-Frank Act Section 1033, which grants customers access to their banking data [1]. He argues that banks are exploiting legal gray areas to control data flow and limit consumer choice in practice, even though such rights are theoretically protected [1]. The complexity of regulations further complicates customers’ ability to switch banks, effectively entrenching the dominance of major financial institutions [1].

As tensions between traditional banks and crypto platforms continue to rise, the debate highlights the growing challenge of balancing innovation with consumer access in the digital economy [1]. Rampell insists that the solution lies not in new legislation but in enforcing existing laws to counter behind-the-scenes anti-competitive practices [1]. The broader implications of Chokepoint 3.0 underscore the need for a regulatory approach that ensures fair competition and supports the development of digital financial ecosystems [1].

Source:

[1] Major U.S. Banks Now pushing "Chokepoint 3.0" to Kill...

(https://coingape.com/major-u-s-banks-now-pushing-chokepoint-3-0-to-kill-crypto-a16z-partner/)