The Consumer Financial Protection Bureau’s (CFPB) Section 1033 “open banking” rule—driven by President Biden’s former CFPB Director Rohit Chopra—hasn’t been vacated yet. But growing criticism from across the financial landscape is a clear signal: this top-down mandate threatens to do more harm than good.
Crypto champions, fintech advocates, and some government officials have framed this rule as vital for innovation. But that’s simply not true—and it’s not grounded in sound thinking. The Chopra rule isn’t about expanding consumer control. It’s about centralizing government control over how financial data moves—setting a dangerous precedent that weakens privacy, distorts competition, and politicizes the future of banking.
Let’s be clear: consumer access to financial data is a good thing. But the market already delivers it. Banks and fintechs have developed secure, voluntary APIs that let consumers connect budgeting apps, crypto platforms, and online lenders to their accounts. These systems didn’t arise because of government pressure—they exist because of consumer demand. Biden’s CFPB stepped in not to fix a broken market, but to replace it with their preferred market.
Under Section 1033, banks would be required to share customer data on demand with third parties—under rigid, federally dictated standards. But the rule fails to impose strong, uniform security protocols or clarify who’s liable if that data is misused, stolen, or resold. It mandates data outflows but doesn’t guarantee protection or accountability once the data leaves.
This isn’t consumer protection—it’s a blueprint for confusion and risk.
Some supporters argue the rule is necessary because banks could charge fintech firms for access to consumer data—implying this would harm competition. But in a functioning market, nothing is free. Banks invest heavily in cybersecurity, data infrastructure, and fraud prevention. Charging third parties for access to that infrastructure isn’t predatory—it’s economics. If a fintech provides real value to consumers, it can compete on price and service, just like any other business.
The Chopra rule would have overridden that basic market mechanism. By forcing data sharing on non-market terms, it risks creating cross-subsidies where smaller banks and institutions bear the cost while large, VC-backed fintechs enjoy privileged access. That’s not competition—it’s central planning.
Many in the crypto space have rallied behind 1033 as if it’s the gateway to decentralized freedom. But that’s a contradiction. You can’t claim to be building alternative currencies and financial rails, then demand the government force legacy institutions to hand you access to their infrastructure for free. The crypto world should thrive on competition, not coercion. Markets—not mandates—should determine who wins, and it’s never a good idea to hand federal agencies more control over who gets access to financial data—and how. Empowering regulators to pick winners and losers makes the threat of government interference more likely and warps the market. If regulators control the pipes, it’s only a matter of time before they control who gets to drink.
Fintech absolutely has a place in a competitive economy. Consumers benefit from innovation, convenience, and better services. But innovation must be earned in the marketplace—not locked in through regulation. That’s how you get durable progress—and guardrails against abuse.
If the CFPB truly wanted to empower consumers, it would get out of the way and let the financial sector continue building secure, consent-based data sharing on its own terms. Instead, the Chopra rule reflects a familiar reflex: Washington assuming it knows best.
Open banking shouldn’t mean government-directed banking. It should mean consumer-driven choice in a free and competitive system. The 1033 rule hasn’t been killed yet—but it should be. For privacy, innovation, and a financial future shaped by people—not planners.
