At least two stablecoin startups lost access to their JPMorgan Chase (JPM) accounts in recent months, according to a media report on Friday, after the firms’ activity in countries with high legal and sanctions risk triggered compliance concerns.
One of the stablecoin firms promoted the ability for users to transact without providing identity information, a practice at odds with banks’ obligation to verify clients and the origin of funds, The Information reported. A second startup, meanwhile, cut off users in higher-risk jurisdictions like Venezuela after JPMorgan (JPM) moved to freeze its accounts, the report said, citing the firm’s communications with customers.
The two Latin America-focused startups — Blindpay and Kontigo — are reportedly funded by venture capital firm Y Combinator and connected to JPMorgan (JPM) via digital payments company Checkbook, which joined the JPMorgan payments partner network last year.
Stablecoins (USDC-USD) (USDT-USD) are a type of crypto designed to hold a steady value by being tied to assets like the U.S. dollar or gold. They have become popular overseas as stablecoins offer a way to move and hold dollars faster in countries with volatile currencies, capital controls or limited access to the traditional banking system.
The accounts freeze “has nothing to do with” the nature of the stablecoin companies, a JPMorgan spokesperson told The Information, adding that “we bank both stablecoin issuers and stablecoin-related businesses, and we recently took a stablecoin issuer public.”
JPMorgan Chase (JPM) did not immediately respond to Seeking Alpha’s request for comment.