If you think government moves slowly, you haven’t been watching the open banking saga unfold. In just 29 days, we’ve witnessed plot twists that have impacted an unprecedented regulatory reversal, leaving banks to navigate uncharted waters. The Consumer Financial Protection Bureau (CFPB) went from “this rule is toast” to “actually, let’s fix it” faster than you can say “blockchain disruption.”
The Setup: Banks Get Their Wish (Sort of)
The current administration, fresh off campaign promises to dismantle regulatory reach, decides to fulfill its obligations by taking aim at the CFPB’s Rule 1033. Their solution? File a motion to rescind the rule altogether, essentially telling the financial industry to “figure it out” themselves.
Enter JPMorgan Chase. Its contribution to this regulatory vacuum? Announcing its intention to charge fees to fintechs for accessing consumer data, something explicitly forbidden under the original rule. This opened the door for banks to control the market, which was precisely what Rule 1033 was designed to prevent. (See my blog post: JPMorgan’s Data Tax: The End of Free Innovation, July 14, 2025.)
The Counterattack: Fintechs Fight Back
This fee announcement set off a chain reaction of somewhat unrelated (yet totally related) events. The fintech community did not sit back and accept its fate. They lobbied the White House vigorously, armed with PowerPoints, opposing the emergence of an “open banking” model that looked suspiciously like “closed banking with extra steps, for a price.”
Meanwhile, the Genius Act passed, providing crypto companies with a clear path forward for their stablecoin ambitions. Suddenly, they had time to focus on one of their key needs: efficient (and inexpensive ) account verification infrastructure.
The Game Changer: Big Crypto Enters the Fight
Here’s where it gets fast and furious. Big crypto entered the conversation, lobbying for—wait for it—MORE government regulation of the wild west of open banking. You can’t make this stuff up. The industry built on decentralization was asking for centralized rules.
Big crypto trumps big banks. Sorry, I had to do that.
The Stunning 29-Day Reversal
Without a press release or even a heads-up tweet, the CFPB filed a motion asking the courts to pause the current lawsuit challenging its ability to issue the regulation. The stay was granted on the basis that the CFPB would immediately launch a new, accelerated rulemaking process to “reconsider and substantially revise the challenged rule, aligning it with the new leadership’s policy priorities and correcting any deficiencies.”
In 29 days, the bureau reversed its position from “this rule is not legal” to “we’re going to revise it.” Who says the wheels of government turn slowly?
What’s Next: An 18-Month Regulatory Marathon
The Advanced Notice of Proposed Rulemaking (ANPR), the first step in this regulatory do-over, could emerge in a few weeks. It will not be harkening a quick resolution; the entire process will likely take at least 18 months. It’s only that “short” because they’re starting with the existing rule and adjusting from there.
So here we are, looking at another year or two of discussions, debates, and deliberations on the hot-button issues:
- Fraud and security risk (because nobody wants their financial data floating around like a lost balloon)
- Cost of compliance (spoiler: it’s expensive)
- Unclear liability provisions (the legal equivalent of “not it!”)
- Scope and definition of “covered data” (what’s in, what’s out, and what’s in the gray zone)
- And most importantly, who can charge whom for what
Stay tuned and maybe keep that popcorn handy. This show is far from over.
Impact Analysis: What This Means for Banks
Strategic Positioning Challenges
- JPMorgan’s fee announcement backfired, triggering the regulatory reversal
- Banks must balance competitive moves with regulatory scrutiny
- First-mover advantage has become first-mover risk
Extended Regulatory Limbo
- Original compliance deadlines (2026 to 2030) technically remain, but they are effectively on hold
- Banks must maintain readiness without knowing the final requirements
- Investment decisions face a heightened risk of becoming obsolete
Cost Uncertainty
- Compliance infrastructure investments made for the original Rule 1033 may need rework
- Fee revenue opportunities from data sharing remain unclear
- Technology partnerships require renegotiation without a clear framework
Strategic Recommendations for Banks
Engage Proactively in Rulemaking
- Participate in the ANPR comment period
- Form coalitions with community and regional banks
- Present unified positions on security standards and liability
Strengthen Strategic Partnerships
- Build relationships with fintechs as partners, not just customers
- Explore collaboration opportunities with crypto firms
- Develop APIs that provide value regardless of fee structures
Communication Strategy
- Keep boards informed of regulatory developments
- Manage investor expectations about timeline uncertainty
- Maintain transparent dialogue with fintech partners
The Bottom Line: Opportunity in Uncertainty
Banks should view these 18 months not as a pause, but as a critical window to influence the future regulatory framework while building adaptive capabilities. The institutions that succeed will be those that remain engaged in the process while creating flexible infrastructure that can thrive under any eventual regulatory outcome.
The key is to avoid both paralysis and overcommitment. Continue moving forward with modernization efforts while maintaining the agility to pivot as regulations crystallize.
Stay tuned and maybe keep that popcorn handy. This show is far from over.
