JPMorgan Suspends Services for Stablecoin Startups Amid Compliance Concerns
JPMorgan Suspends Accounts Due to Compliance Risks
JPMorgan has recently suspended banking services for several stablecoin startups, emphasizing the growing compliance challenges faced by banks amid tightening regulations in the global crypto market. This move highlights the inherent risks of operating in high-risk jurisdictions.
Accounts Frozen Over Sanctions Concerns
According to The Information, JPMorgan froze accounts associated with Blindpay and Kontigo, which operate in high-risk regions like Venezuela. Concerns over exposure to international sanctions prompted the bank to take precautionary measures to mitigate regulatory risks.
JPMorgan identified the operations in sanctioned or high-risk areas as a significant issue. Transactions linked to such regions trigger enhanced compliance reviews, necessary to avoid potential violations that could threaten the bank's operational licenses.
Compliance and Verification Challenges
Additional concerns included inadequate identity verification practices, with some firms allowing transactions without full customer identification, breaching Know Your Customer (KYC) requirements and increasing Anti-Money Laundering (AML) risks.
JPMorgan's decision was not an anti-stablecoin stance. A spokesperson confirmed the bank's support for compliant stablecoin businesses, noting that recent actions were due to specific compliance violations.
Increasing Regulatory Pressure on Stablecoins and Banks
Stablecoins operate within a rapidly evolving regulatory framework. Banks must comply with stringent oversight standards, as client compliance failures directly impact banking partners, prompting cautious behavior across the sector.
AML and Counter-Terrorist Financing (CTF) regulations require banks to monitor transactions against sanctions lists. Stablecoin firms lacking these controls introduce significant risks, potentially leading to restricted banking services.
Transparency is crucial, with many jurisdictions mandating one-to-one reserve backing and regular audits. Additionally, data-sharing obligations, such as the Financial Action Task Force's Travel Rule, require disclosure of sender and recipient information for large transactions.
In July 2025, the U.S. enacted the GENIUS Act, establishing a federal framework for stablecoins, demanding strict reserve, redemption, and compliance standards. This clarity has heightened enforcement expectations, reducing tolerance for compliance lapses.
JPMorgan's actions reflect broader industry caution. As regulations evolve, banks may further limit exposure to high-risk crypto activities. Ultimately, the readiness to comply will determine which stablecoin firms can thrive.