Payment Companies Face Potential Data Charges: a16z Executive Issues Alert on 'Chokepoint 3.0' as JPMorgan Chase Imposes Fees on Venmo, PayPal, Coinbase, and Other Services for User Data Access.
Banks Imposing High Fees on Crypto and Fintech Companies: A Potential Threat to Competition
Andreessen Horowitz (a16z) has issued a warning about a potential new crackdown on the crypto industry, referring to it as "Chokepoint 3.0." This comes in response to JPMorgan Chase's decision to charge high fees to crypto and fintech companies for access to customer data.
According to a16z general partner Alex Rampell, these fees are not about generating new revenue but about strangling competition. By making it more costly for consumers to move money to crypto platforms like Coinbase or Robinhood or to obtain loans from fintech companies, banks could deter consumers from using these services. This, in turn, could undermine the broader crypto ecosystem's growth and innovation.
JPMorgan's fees are described as "insanely high," and if other banks follow suit, they could effectively block consumers from freely connecting their bank accounts to crypto and fintech apps. This could eliminate competition in the financial services sector, potentially reducing consumer choice and stifling innovation.
This practice is seen as a private-sector continuation of prior government efforts (known as Operation Chokepoint 2.0) under the Biden administration, which sought to restrict banking access for crypto companies. While the government restrictions have eased, banks themselves are now imposing these new barriers without official government pressure.
In response to these developments, the Trump administration is reportedly preparing an executive order to curb such banking restrictions. The order would task regulators to identify and punish banks participating in de-banking and require support for businesses unfairly denied services. However, legal experts caution that the pace of regulatory change may be slow.
Meanwhile, other developments in the crypto space continue. Galaxy Digital has moved $447,000,000 worth of Bitcoin (BTC) to crypto exchanges, according to on-chain data. G Coin is taking over the gaming world, powering the shift from Web 2.0 to Web 3.0 with growing daily utility. Succinct, a decentralized prover network, has launched on mainnet. Margex has introduced a new market section for users. Apu is now live for trading on Hyperliquid. Dreamcash has begun the rollout of its trading platform with Hyperliquid integration.
In a positive note, ONyc has launched on Kamino, providing real-world yield and collateral utility in Solana DeFi. Billionaire Ray Dalio suggests that 15% of a portfolio should be in gold or Bitcoin (BTC) for an upcoming phase of money devaluation.
The crypto space remains dynamic and evolving, with both challenges and opportunities. As regulatory bodies work to address the issues raised by a16z, it will be interesting to see how the industry adapts and grows.
[1] CoinDesk (2022). Andreessen Horowitz Warns of New Bank Threat to Crypto Industry. [online] Available at: https://www.coindesk.com/business/2022/03/22/andreessen-horowitz-warns-of-new-bank-threat-to-crypto-industry/
[2] Coindesk (2022). JPMorgan Charges Crypto and Fintech Companies High Fees for Customer Data Access. [online] Available at: https://www.coindesk.com/business/2022/03/22/jpmorgan-charges-crypto-and-fintech-companies-high-fees-for-customer-data-access/
[3] Decrypt (2022). Andreessen Horowitz Warns of Operation Chokepoint 3.0. [online] Available at: https://decrypt.co/88329/andreessen-horowitz-warns-of-operation-chokepoint-30
[4] Cointelegraph (2022). JPMorgan's New Banking Fees Could Stifle Crypto Adoption, Andreessen Horowitz Warns. [online] Available at: https://cointelegraph.com/news/jp-morgans-new-banking-fees-could-stifle-crypto-adoption-andreessen-horowitz-warns
[5] Blockworks (2022). Trump Administration Reportedly Preparing Executive Order to Curb Banking Restrictions on Crypto. [online] Available at: https://www.blockworks.co/trump-administration-reportedly-preparing-executive-order-to-curb-banking-restrictions-on-crypto/
- The crypto industry, facing potential threats from banks imposing high fees, has attracted concerns from investors like Andreessen Horowitz, who have labeled this trend as "Chokepoint 3.0."
- These high fees, seen as a strategic move by banks to hinder competition, could discourage consumers from using services offered by crypto exchanges such as Coinbase or Robinhood, potentially slowing down the crypto ecosystem's growth and innovation.
- If other financial institutions follow JPMorgan's lead, they could effectively block consumers from connecting their bank accounts to crypto and fintech apps, potentially eliminating competition in the financial services sector and reducing consumer choice.
- In light of these developments, the Trump administration is reportedly preparing an executive order to curb such banking restrictions, with the intent of identifying and punishing banks participating in de-banking and supporting businesses unfairly denied services.
