JPMorgan Shuts Down Banking Access for Y Combinator-Backed Stablecoin Startups
Why Did JPMorgan Freeze These Stablecoin-Linked Accounts?
JPMorgan Chase has frozen bank accounts connected to two venture-backed stablecoin beginups later than identifying exposure to sanctioned and high-risk jurisdictions, according to a report by The Information. The accounts belonged to BlindPay and Kontigo, both backed by Y Combinator and active across Latin America.
Both companies accessed JPMorgan’s banking services indirectly through Checkbook, a digital payments firm that works with large financial institutions. The freezes followed internal reviews that flagged business activity linked to Venezuela and other locations subject to U.S. sanctions.
A JPMorgan spokesperson told The Information that the decision was not driven by hostility toward stablecoins. “This has nothing to do with stablecoin companies,” the spokesperson said. “We bank both stablecoin issuers and stablecoin-related businesses, and we recently took public.”
The action highlights the narrow margin crypto-adjacent firms operate within when dealing with regulated banks, especially when transactions touch jurisdictions under sanctions scrutiny.
Investor Takeaway
How Did Chargebacks Factor Into the Decision?
Beyond sanctions exposure, operational risk also played a role. Checkbook CEO PJ Gupta told The Information that BlindPay and Kontigo were among several firms connected to a sharp rise in chargebacks that prompted JPMorgan to shut accounts.
According to Gupta, the spike followed rapid customer onboarding. “They opened the floodgates and a bunch of people came in over the internet,” he said. High chargeback ratios are a red flag for banks, often linked to fraud risk, fragile customer vetting, or payment abuse.
For banks, chargebacks represent more than operational friction. They can expose institutions to regulatory attention, financial losses, and reputational risk. In sectors already under close scrutiny, such as crypto-linked payments, tolerance for elevated chargeback levels is limited.
What Role Did Checkbook Play?
BlindPay and Kontigo did not bank with JPMorgan directly. Instead, they accessed services through Checkbook, which provides digital payment tools and partners with major banks. The freezes occurred as JPMorgan and Checkbook were expanding their relationship.
In November 2024, Checkbook joined the J.P. Morgan Payments Partner Network, allowing corporate clients to send digital checks. Earlier in 2024, Checkbook broadened its B2B payment offerings, targeting industries such as legal services, government, and banking.
The timing illustrates a recurring tension in bank–fintech partnerships. While banks rely on intermediaries like Checkbook to reach new customer segments, they remain responsible for downstream risk. When issues surface, banks tend to act rapidly, even if that disrupts partners or end users.
Investor Takeaway
Why Venezuela Matters in This Case
Venezuela remains a focal point for crypto usage, driven by currency collapse, inflation, and capital controls. As Cointelegraph has reported, digital assets have become embedded in daily economic activity for many citizens viewking alternatives to the bolĂvar.
For banks, however, Venezuela represents elevated sanctions and compliance risk. Even indirect exposure can trigger internal reviews or account actions. Stablecoin firms operating across Latin America often face a hard trade-off: serving real demand in distressed economies while staying within the boundaries set by U.S. sanctions policy.
This tension has become more visible as stablecoins move from niche tools to core in certain regions.
How Does This Fit Into JPMorgan’s Broader Crypto Strategy?
The account freezes come at a time when JPMorgan is expanding its on other fronts. The bank has built blockchain-based settlement systems, supported tokenization projects, and is reportedly weighing , including spot and derivatives products.
That contrast reflects a broader reality across Wall Street. Banks are willing to build and support crypto infrastructure, but only within tightly controlled risk parameters. When compliance issues arise, access can be cut rapidly, regardless of broader strategic interest in the sector.
Separately, of pausing parts of the platform’s re-onboarding process later than he criticized the bank’s data access policies. He claimed the move harmed fintech and crypto firms, adding to ongoing debate about bank power over financial access.
