Fintech crypto groups urge Trump to defend open banking rules as banks challenge free data access



Fintech Showdown: Battle Over Open Banking Rules

Fintech and Crypto Groups Rally for Open Banking

Ten distinguished fintech and crypto organizations are turning up the warmth in a legal clash over open banking regulations, calling on President Donald Trump to step in. They’re sounding the alarm about how big banks’ resistance could stifle financial innovation and limit consumer access to exciting tools like stablecoins and DeFi platforms. Notable groups similar to the Financial Technology Association, the American Fintech Council, and the Blockchain Association argue that major banks are leveraging lawsuits and data fees to derail a 2024 rule established in the course of the Biden era. This rule, expected to roll out for major banks by mid-2026, goals to set secure, API-based data-sharing guidelines, giving consumers the facility to share their financial data with third parties, freed from charge.

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The Heart of the Dispute: Authority and Alignment

The crux of the conflict lies within the Consumer Financial Protection Bureau’s (CFPB) apparent alignment with banks’ legal claims, which argue that the rule overreaches the agency’s authority. These banks are looking for court approval to nullify the regulation. The fintech coalition slams this position as contradicting Trump’s previous support for open banking reforms, noting the rule’s roots trace back to his first term. In a letter dated July 19, they urged Trump to defend the policy, highlighting potential risks to financial innovation and the broader uptake of digital assets. They also voiced worries about “debanking” scenarios, where banks might limit access to next-gen financial services through lawsuits or fees.

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JPMorgan’s Move and the Fintech Response

Leading the charge against the rule is JPMorgan Chase, which has filed a lawsuit to dam it and announced plans to levy data access fees on aggregators starting in September. JPMorgan’s CEO, Bill Demchak, argues these fees are crucial to cover data security costs, despite the fact that no other banks have followed suit. The fintech groups counter that such fees could shift control of monetary data from consumers to banks, undermining the rule’s intention. Phil Goldfeder, CEO of the American Fintech Council, calls this a “pivotal moment” for open banking, warning that allowing banks to impose fees could hinder competition and squash innovation.

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Implications for Fintech Startups and Market Stability

The final result of this legal battle carries significant weight for fintech startups that rely upon the rule to secure funding and scale. Past challenges to similar regulations have led to increased compliance costs and operational hurdles. Analysts caution that ongoing litigation could disrupt the market. The coalition draws connections between this dispute and the recent Genius Act, which sets a framework for stablecoin oversight. They argue that resolving the legal uncertainty surrounding open banking is crucial for maintaining coherent digital asset policies.

The Clock is Ticking

The CFPB has until July 29 to reply to the Financial Technology Association’s intervention within the case. The fintech and crypto groups see this as a pivotal test of whether the U.S. will champion consumer-driven financial innovation or let established institutions dominate the landscape. With Trump’s social media firm having invested $2 billion in digital currencies, the coalition positions the open banking rule as essential to safeguarding the long run of monetary technology.

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Sources

[1] Crypto and fintech groups urge Trump to defend open banking rules, warning of threats to wallets and stablecoins
[2] Financial technology firms and merchants ask Trump to intervene with the CFPB over open banking litigation
[3] Crypto groups plead for Trump to stop JPMorgan’s scheme to impose fees on open banking
[4] JPMorgan’s data fees and the broader implications for fintech and crypto innovation

Image Credit: www.ainvest.com

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