TLDR
- The CFPB’s open banking rule stems from Section 1033 of the Dodd-Frank Act.
- Major banks are challenging the rule to retain control over user data.
- Wyoming passed a law in 2024 promoting open banking in rural regions.
- Open banking enables access to platforms like PayPal, Venmo, and Gemini.
Efforts to finalize national open banking rules are gaining attention as the U.S. faces pressure to maintain its lead in financial innovation. A growing debate involves government regulators, financial institutions, and digital asset platforms. Senator Cynthia Lummis points to Wyoming’s model as a way forward, stressing that consumer data rights and digital access are vital for expanding financial services and keeping the U.S. globally competitive.
Open Banking Rooted in Consumer Data Rights
Section 1033 of the Dodd-Frank Act, passed in 2010, gives consumers the right to access and share their own financial data. This provision supports what is now known as open banking, allowing users to authorize secure data sharing with third-party tools like Venmo, PayPal, and digital asset platforms.
The Consumer Financial Protection Bureau (CFPB) was tasked with creating clear rules under this section. The process began under the Trump administration and was finalized in 2024 by the Biden administration. Major banks, however, filed legal challenges, arguing the rule exceeded its legal boundaries.
According to Senator Lummis, the banks’ resistance centers on control over consumer data. “Banks want to continue to have a monopoly over their most precious asset — your personal data,” she stated.
Wyoming’s Role in Shaping Open Banking Policy
Wyoming has passed multiple blockchain and fintech laws since 2017. In 2024, the state passed legislation to promote open banking adoption by local banks. The goal is to attract digital asset firms and support financial innovation in rural regions.
Lummis pointed to practical examples from Wyoming. A resident using a community bank should be able to connect their account to services like PayPal. Open banking makes this possible by granting secure data access across platforms.
The senator emphasized how digital tools can benefit people in remote areas. These include alternative credit scoring, easier budgeting, and more options for comparing financial products.
Access to Digital Assets Tied to Open Banking Rules
Digital asset exchanges and stablecoin platforms require users to link traditional bank accounts. Without open banking, consumers may struggle to make these connections due to bank restrictions.
Lummis warned that some large banks may limit access to digital asset platforms like Kraken and Gemini. This could restrict consumer choice and slow the growth of financial technology.
Many banking leaders have voiced concerns about digital assets. Lummis said this opposition has included targeted restrictions against entire industries, individuals, and political figures. Clear open banking rules, she argues, can prevent such limitations and ensure fair access to financial services.
Open Banking Supports Small Businesses and Rural Economies
In areas like Wyoming, small businesses often rely on seasonal or variable income. Open banking allows access to fintech tools that align with these needs. These tools include flexible credit models, automated payments, and improved fraud detection.
Farmers, ranchers, and local shops can benefit from faster invoicing and payment processing. Open banking also gives them the ability to compare financial products, helping them make better decisions for their operations.
The CFPB is being urged to define consumers broadly and allow authorized third-party access. The goal is to ensure that consumers, not institutions, control how their data is used.
Senator Lummis concluded that clear regulations are needed to avoid pushing innovation and entrepreneurship out of the country. She stated, “When consumers have freedom and entrepreneurs can fairly compete, we all win.”
