JPMorgan has put on hold a plan to resume its banking relationship with cryptocurrency exchange Gemini.
The move follows public criticism by Gemini's leadership regarding the bank’s stance on third-party access to financial data. Specifically, the pause comes in the context of wider tensions surrounding data portability in the financial sector, specifically involving Plaid, a data aggregator commonly used by fintech and crypto firms to connect users’ bank accounts to platforms such as Gemini and Coinbase.
According to representatives from Gemini, the exchange had been offboarded previously, and recent efforts to rejoin JPMorgan’s client roster were halted in connection with these data access issues.
Increasing scrutiny over data sharing and aggregator practices
At the core of the disagreement is a regulatory and industry debate over the US Consumer Financial Protection Bureau’s 2023 Open Banking Rule. The rule affirms consumers’ rights to share their financial data with trusted apps, including those used for cryptocurrency transactions. In response, several banks have raised concerns over what they view as excessive and unregulated data collection by aggregators such as Plaid.
Officials from JPMorgan have claimed that Plaid makes nearly 2 billion monthly API calls to user accounts, most of them, according to the bank, without direct consumer initiation. The bank has argued that this level of access creates vulnerabilities, pointing to what it described as ‘tens of millions of dollars in fraud’ linked to aggregator traffic over the past year. Representatives stated that JPMorgan supports regulated and low-cost data sharing solutions, estimating a fair access cost at under ten cents per user per month.
The dispute escalated when Gemini co-founder Tyler Winklevoss publicly accused JPMorgan and other financial institutions of attempting to marginalise fintech and cryptocurrency businesses by limiting access to customer banking data. This accusation included references to ‘Operation ChokePoint 2.0’, a term used to describe what some in the crypto industry allege is a systemic effort by banks and regulators to cut off critical services to digital asset firms.
While JPMorgan did not directly address its dealings with Gemini, a bank spokesperson responded to inquiries by stating that JPMorgan continues to serve a number of crypto-related businesses and is actively onboarding new clients in the sector. The bank rejected claims that it was aiming to block fintech or crypto firms, instead shifting the focus to what it views as uncontrolled and risky data harvesting practices by third-party aggregators.
Meanwhile, ten crypto firms recently issued a joint letter to former President Donald Trump, urging action to uphold consumer rights to control and share their own financial data under the Open Banking Rule.
