A Unified Call for Consumer Data Rights
In a significant move to protect consumer financial data rights, a coalition comprising fintech, cryptocurrency, and retail industry trade groups has called upon the US Consumer Financial Protection Bureau (CFPB) to implement a comprehensive open banking rule. This coalition, which includes prominent crypto advocacy groups such as the Blockchain Association and the Crypto Council for Innovation, as well as fintech organizations like the Financial Technology Association and the American Fintech Council, is pushing for a regulation that ensures consumers maintain control over their financial data. The coalition's appeal comes in response to the CFPB's examination of the Personal Financial Data Rights Rule under Section 1033 of the Dodd-Frank Act, which is set to determine how consumers can share their financial data with third-party services.
The coalition's letter emphasizes the importance of clear consumer data rights, urging the CFPB to finalize an open banking rule that unequivocally affirms that Americans own their financial data, rather than large financial institutions. The groups argue that consumers should have the freedom to share their data with any authorized third party, not just fiduciaries. Additionally, the coalition insists that the CFPB uphold the existing ban on data access fees, advocating for a free and competitive market. They point out that this prohibition is already well established in law, and maintaining it is crucial for fostering innovation and competition in the financial services sector.
The Battle for Open Banking in the United States
Open banking, which was first proposed in the United States during the administration of former President Joe Biden in 2022 and finalized on October 22, 2024, allows consumers to securely share their financial data with third-party applications through application programming interfaces (APIs). This framework serves as a vital bridge between traditional finance and emerging sectors such as decentralized finance (DeFi) platforms, cryptocurrency on-ramps, and digital banking tools. According to the coalition's letter, open banking is already utilized by over 100 million Americans to access various financial tools, including investment platforms, crypto wallets, and digital payment apps, to manage their finances and operate businesses.
Despite its potential benefits, open banking has faced significant opposition from major banks in the United States. On the same day the rule was finalized in October 2024, the Bank Policy Institute, a trade group representing major banks like Wells Fargo, Bank of America, and JPMorgan Chase, filed a lawsuit to block the rule. The institute argued that the regulation posed security risks and placed an unfair burden on incumbent financial institutions. Furthermore, a Bloomberg report on July 11 revealed that JPMorgan planned to begin charging fintech companies for access to their customers' banking data, a move that has been criticized by the coalition as stifling innovation and competition.
A Broader Push for Financial Innovation
The coalition's recent letter builds on an earlier appeal sent to US President Donald Trump on July 23, which accused US banks of hindering innovation by suing to delay open banking reforms and introducing data-access fees for fintech and crypto platforms. On August 14, more than 80 executives from the crypto and fintech sectors signed a letter urging the President to prevent banks from imposing fees on companies that access customer financial data. The coalition argues that such fees would not only hinder innovation but also limit consumer choice and control over their financial information.
Tyler Winklevoss, co-founder of Gemini, a prominent cryptocurrency exchange, expressed his concerns on social media platform X, stating, "Banks want to gut the Open Banking Rule (1033) so they can tax and control your financial data and remove your freedom to choose the services you want. This is bad for crypto and financial innovation in America." As the deadline for submitting comments to the CFPB regarding its proposed open banking rule approaches, the coalition remains steadfast in its efforts to ensure that consumer data rights are protected and that innovation in the financial sector is not stifled by incumbent banks seeking to maintain their dominance.