JPMorgan Restricts Stablecoin Accounts Linked to Venezuela Over Sanctions Compliance Risk

Source: CryptoTale Original Title: JPMorgan Restricts Stablecoin Accounts Linked to Venezuela Original Link: https://cryptotale.org/jpmorgan-restricts-stablecoin-accounts-linked-to-venezuela/ JPMorgan Chase froze bank accounts tied to two stablecoin startups after risk controls flagged activity linked to Venezuela. The action targeted accounts used by BlindPay and Kontigo, two firms serving customers across Latin America. Both companies routed payments through Checkbook, a U.S.-based digital payments provider that connects fintech clients to large banks.

The bank linked the decision to compliance and transaction-risk concerns tied to sanctioned and legally restricted jurisdictions. Venezuela remains a high-risk corridor because U.S. sanctions raise screening and reporting burdens. As a result, banks often tighten onboarding and monitoring when customer activity touches that region.

JPMorgan Stablecoin Account Freeze Tied to Sanctions Risk

JPMorgan identified the startups’ Venezuela exposure as a key risk factor. Sanctions programs require banks to screen customers, counterparties, and payment flows. They also require banks to stop or review transactions that raise red flags.

The bank said the action did not represent a broad stance against stablecoins. JPMorgan continues to serve stablecoin issuers and related businesses under its existing compliance framework. However, the bank can still restrict accounts when activity triggers legal, fraud, or operational concerns.

Kontigo disputed claims about its business practices. The company said it does not support transfers without identity checks. It also said it follows internal controls designed for cross-border payments.

Furthermore, regulators and compliance teams have increased focus on crypto activity tied to sanctioned areas. In 2024, officials warned that Venezuela could use crypto rails to bypass restrictions. That backdrop has raised scrutiny on payment flows that connect Venezuela to foreign markets.

Checkbook Payments Partner Cites Chargebacks and Disputed Transactions

Checkbook’s chief executive, PJ Gupta, linked the account freezes to a spike in chargebacks and disputes. He said the volume increased after the startups expanded online onboarding. He described the growth as a rapid opening of access that pulled in many internet-based users.

Chargebacks matter for banks because they can signal fraud, weak verification, or merchant misuse. They also create direct financial exposure through reversals and fees. Consequently, unusual dispute rates can trigger automated risk alerts and manual reviews.

Moreover, the episode highlights the role of intermediaries in stablecoin payments. Startups often rely on payment providers to reach bank rails. When dispute volumes rise, the provider and the bank face pressure to act quickly.

JPMorgan and Checkbook have also expanded their relationship. Checkbook joined a payments partner network in November 2024 to support digital check delivery for corporate clients.

Stablecoin Payments Regulation and 2026 Rollout Plans

U.S. regulators are drafting clearer rules for payment stablecoins. Lawmakers want uniform standards for reserves, redemptions, and compliance checks. Furthermore, clear rules can reduce uncertainty for banks and issuers while strengthening safeguards against illicit finance.

A U.S. banking regulator also proposed an approval framework tied to the GENIUS Act. The proposal described how banks could issue regulated payment stablecoins through subsidiaries. Therefore, banks could compete with crypto-native payment firms under federal oversight.

Outside the United States, institutions have signaled plans to launch stablecoins by 2026. Even so, issuers still need banking partners for custody, fiat settlement, and compliance services.

For stablecoin startups, the JPMorgan decision highlights the importance of monitoring risk conditions. Growth in new users can lead to disputes, and disputes can result in account restrictions. In turn, access to bank rails can tighten even if the broader stablecoin market expands.