Banks Accused of Stifling Crypto Innovation: 'Chokepoint 3.0'

Venture capital firm Andreessen Horowitz (a16z) alleges that major banks are making it difficult and more expensive for consumers to use fintech and crypto applications. This is being called a new form of anticompetitive behavior, dubbed 'Operation Chokepoint 3.0.'

According to Alex Rampell, General Partner at a16z, traditional financial institutions are imposing high fees for accessing account data or moving funds to platforms like Coinbase or Robinhood, hindering competition.

Accusations of 'Chokepoint 3.0' Tactics

Rampell argues this new 'Chokepoint 3.0' follows previous attempts to limit crypto's growth. He states, 'Banks are aiming 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.'

Chokepoint 2.0 referred to the debanking of crypto businesses during the Biden administration. Now, Rampell suggests banks are creating new obstacles.

JPMorgan Under Scrutiny

JPMorgan Chase is specifically called out as an example of this behavior.

While Section 1033 of the Dodd-Frank Act grants consumers the right to access their financial data, banks are now exerting control over how that data is delivered, sometimes charging fees for basic information like routing and account numbers.

A16z argues these tactics increase the cost of transferring funds to alternative platforms, deterring users and limiting competition. Rampell notes, 'If it suddenly costs $10 to move $100 into a crypto account, maybe fewer people will do it. And if JPM and others can block consumers from connecting their own freely chosen crypto and fintech apps to their bank accounts, they effectively eliminate competition.'

Gemini co-founder Tyler Winklevoss echoed these concerns, suggesting JPMorgan's data access fees could bankrupt fintech platforms, stifling innovation and harming consumers.

Read more: Winklevoss Claims JPMorgan Halted Gemini Onboarding After Data Access Fees Criticism

JPMorgan has responded to the criticism, stating to Forbes that the fees are intended to curb misuse, given the nearly 2 billion monthly requests for user data from third parties.

Call for Intervention

Rampell is urging the current administration to prevent these practices before they become widespread, arguing that intervention is needed to protect consumer choice and competition.

'We don’t need a new law; we just need the administration to prevent this callous and manipulative attempt to kill competition and consumer choice,' he added.

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