JPMorgan Flags Risky Stablecoin Activity, Freezes Account of Two Firms

JPMorgan has frozen accounts linked to two venture-backed stablecoin startups in Venezuela. This is happening against the backdrop of already pending compliance issues in the region.

JPMorgan Freezes Accounts Tied to Stablecoin Projects

As reported by The Information, the company halted bank account activity that was linked to at least two stablecoin-based startups in areas that were identified as high-risk. These companies, named BlindPay and Kontigo, are supported by Y Combinator and cater mainly to users in Latin America, Venezuela included.

The accounts were accessed through Checkbook, a digital payments provider that partners with major banks. According to sources, the involvement of the startups raised concerns based on sanctions as well as the laws covering certain regions.

The bank emphasized that the freezing of the accounts was in no way an assessment of stablecoins as a business. A spokesperson said in a statement.

“This has nothing to do with stablecoin companies. We bank both stablecoin issuers and stablecoin-related businesses, and we recently took a stablecoin issuer public.”

Checkbook CEO PJ Gupta attributed the sudden rise in chargebacks associated with BlindPay and Kontigo as one of the reasons why JPMorgan made the move. Gupta stated that the increased number of chargebacks happened after BlindPay and Kontigo increased their customer base online.

“It’s just because they opened the floodgates,” Gupta said. He also added that the volume of disputed transactions raised red flags within JPMorgan’s risk systems.

Jesus Castillo, co-founder of Kontigo, has disputed the allegations being made about the company’s activities. He also said that allegations that Kontigo assisted in the transfer of funds from Venezuela to other countries without identity verification are untrue.

The move from the bank also comes amid the recent monitoring of crypto movements associated with sanctioned areas. In 2024, there were warnings  that the Venezuelan government was likely to make increased use of crypto as a way around financial sanctions.

Stablecoin Traction Builds Ahead of 2026

Momentum for the use of stablecoins has continued to build ahead of the coming year. This month, the FDIC proposed an approval framework for stablecoins under the GENIUS Act. 

They outlined how U.S. banks could also offer regulated payment stablecoins in the country through subsidiaries. This makes it possible for banks to compete with crypto-based competitors under federal regulation.

Internationally, some major institutions are also lining up the launch of stablecoins. Sony Bank is working to launch a stablecoin pegged to the US dollar by 2026.

Western Union has similarly announced the plan for the U.S. Dollar Payment Token. This token is anticipated to be released in the early part of 2026 on the Anchorage Digital Bank platform.