JPMorgan blocks Gemini from further enrollment due to ongoing disagreement over banking data access regulations.
The Consumer Financial Protection Bureau's (CFPB) Open Banking Rule, implemented in October 2024, has hit a roadblock due to ongoing litigation from major U.S. banks, including JPMorgan. The rule, which mandates banks to provide consumer financial data access to authorized third parties, has been challenged by banks who argue that the law limits data sharing to consumers or their fiduciaries, not to third parties with no special relationship.
The legal battle has been intense, with fintech groups such as Gemini actively defending consumer data access rights. In a recent development, JPMorgan is planning to set new fees on fintech firms that access customer data, expressing concerns about the role of unregulated data aggregators. This move has increased pressure on the CFPB to find a compromise solution.
The CFPB, under new leadership, initially declared the rule unlawful but has now reversed course, deciding to revise it rather than abandon it outright. The agency aims to craft a balanced approach addressing concerns raised by both banks and fintechs. The Financial Technology Association, representing fintechs including firms like Gemini, intervened in the litigation defending the rule’s legality, emphasizing open banking’s role in promoting innovation, competition, and consumer rights.
In a separate legal dispute, the trial involving Storm, Binance, and Tornado Cash has faced issues with late evidence disclosure, specifically evidence tied to funds traced through Binance and Tornado Cash. This late disclosure of evidence is argued to violate federal evidence procedures and damage the fairness of cross-examination in the ongoing trial. Judge Failla is considering a request from Storm's legal team to strike testimony from an IRS agent involved in the trial.
Internal emails presented in court show discussions between Dragonfly and the Tornado Cash team, including efforts to implement anti-money laundering measures. Decisions are expected soon on whether venture capitalist Tom Schmidt of Dragonfly will testify, following his attorney's invocation of the Fifth Amendment.
Meanwhile, Tyler Winklevoss, co-founder of Gemini, accused JPMorgan of obstructing fintech and crypto platforms by limiting access to customer banking data. The ongoing friction between traditional banks and digital asset platforms is being suggested by some crypto insiders. Notably, Gemini's banking services with JPMorgan have been halted due to a dispute over fintech data access rules.
The legal fight over the CFPB's Open Banking Rule and aggregator fees is ongoing, with significant implications for data privacy, financial institution concerns, and fintech innovation. The process remains fluid as the agency works toward a revised rule that balances these competing interests. Updates on the litigation are expected every 45 days.
References: [1] CFPB Pauses Enforcement of Open Banking Rule Amid Lawsuits, Reuters, [link] [2] CFPB's Open Banking Rule Faces Legal Challenges, American Banker, [link] [3] JPMorgan's Data-Sharing Dispute with Fintechs Escalates, The Wall Street Journal, [link] [4] Gemini's Banking Services with JPMorgan Halted, Coindesk, [link]
- The legal fight over the CFPB's Open Banking Rule involves fintech groups like Gemini, who are advocating for data access rights amid concerns about ventures like JPMorgan setting new fees on fintech firms.
- In a separate case, Tyler Winklevoss, co-founder of Gemini, has accused JPMorgan of obstructing fintech and crypto platforms by limiting access to customer banking data, suggesting an ongoing friction between traditional banks and digital asset platforms.
- Amidst the ongoing litigation, the CFPB, under new leadership, is revising the Open Banking Rule, aiming to craft a balanced approach addressing concerns from both banks and fintech firms, for the promotion of technology, innovation, competition, and consumer rights in finance.
