The Data Battle Between TradFi and the Encryption Industry: A Resource Struggle Resurfaces

Recently, the financial sector in the United States has once again staged a contest between traditional giants and emerging forces. The main characters in this dispute are Wall Street investment banking giant JPMorgan and the well-known encryption trading platform Gemini. The catalyst for the event was Gemini co-founder Tyler Winklevoss publicly criticizing a large bank for refusing to provide data services to Gemini, attempting to suppress fintech companies and encryption platforms.

This event inevitably reminds industry insiders of the impact that the previous "Operation ChokePoint 2.0" had on encryption companies. Let's take a look at the "financial persecution 2.0" incident that Gemini encountered.

Data has become a key competitive tool

In the intersection of TradFi and the cryptocurrency industry, user data has always been a core resource. Complete KYC information not only helps assess user risk preferences and asset scale but also facilitates the development of business on the platform.

The focal point of this dispute is the usage rights of bank data. Just like some social platforms use API interfaces as a source of income, "data business" has long been a part of the gray area in the platform economy. After Winklevoss criticized a bank for depriving Gemini of the right to access bank data for free through third-party platforms, the bank took a tougher stance and directly suspended its collaboration plan with Gemini.

This practice reminds people of the situation in the previous "Operation ChokePoint 2.0" where some banks refused to provide financial services to cryptocurrency companies and tech startups. This is undoubtedly a form of suppression by TradFi giants against emerging platforms.

"Operation ChokePoint 2.0": The Nightmare of the Encryption Industry

In 2023, affected by the sluggish encryption market and its own operational issues, several crypto-friendly banks went bankrupt one after another. Some believe that this may be related to government pressure on banks to sever business ties with crypto companies.

Subsequently, the "Operation Chokepoint 2.0" initiative gradually came to light. According to some well-known figures in the tech industry, over 30 founders of tech companies have had their bank accounts closed in recent years, which is clearly not an isolated incident.

The behavior of banks "refusing service" often has no clear reason, but the impact can be very serious. At best, it can lead to the inability to open an account; at worst, it can restrict fund transfers and even threaten the survival of a business. In the face of the banking industry, which is indispensable in the modern financial system, both enterprises and individuals appear incredibly small.

It is worth mentioning that this series of events has also laid the groundwork for certain political changes. Industry insiders have stated that their support for a certain political figure is precisely because they cannot tolerate legitimate businesses being subjected to government sanctions due to improper regulation.

Clever Ways to Bypass Regulatory Data Businesses

Another focal point of this dispute is the "American Consumer Financial Protection Act." In 2024, based on a law enacted by the U.S. Congress in 2010, the U.S. Consumer Financial Protection Bureau issued the "Final Rule on Personal Financial Data Rights." This rule requires financial institutions to provide personal financial data for free upon consumer request and allows for its transfer to other service providers.

The original intention of this regulation was to improve financial services by promoting competition, but objectively, it also provides platforms such as cryptocurrency exchanges with free access to users' bank data. Now, some banks are offering the solution: "Want user data? Sure, but it comes at a cost!"

On the other hand, as vested interests, the banking industry is also striving to sue the Consumer Financial Protection Bureau to abolish the "open banking rules," thereby indirectly curbing the development of encryption platforms.

The Ongoing Tug-of-War Between Banking and Encryption Platforms

Recently, several banking associations in the United States jointly requested a suspension of the review of certain encryption companies' bank license applications, citing a lack of transparency in these applications that could pose legal risks to the banking system.

In this regard, some industry insiders have pointed out that the response from the banking sector is intriguing. If they are truly concerned about certain situations, why not directly transform into a trust company with lower regulatory requirements?

There is a view that banks and credit unions rarely reach a consensus on most issues, but they both seem to realize that the competitive pressure brought by the encryption industry is gradually emerging.

Conclusion

Regardless of how the "user data" dispute ultimately concludes, it is certain that the competition between the banking industry and cryptocurrency platforms has become public. With the passage of a series of related bills, the competition between the two sides in areas such as cross-border payments, daily transactions, and commercial acceptance will enter a heated phase. In the future, whether traditional banks will continue to dominate or emerging platforms will rise, the outcome of this competition remains to be seen.