Recent reports indicate that JPMorgan Chase has, in the past few months, frozen the accounts of no fewer than two stablecoin startups. The two affected companies, Blindpay and Kontigo, have both received investments from the renowned venture - capital firm Y Combinator. Their core business operations are centered around Latin America, and they have forged business relationships with JPMorgan Chase via the digital payment company Checkbook. These startups conduct their operations in countries deemed high - risk, such as Venezuela.

This action by JPMorgan Chase brings to the fore the risks that cryptocurrency transactions pose to banks. Banking operations are bound by strict regulatory requirements, including the 'know your customer' (KYC) principle, which mandates banks to verify the identity of their clients, and thorough scrutiny of the source of funds to prevent money laundering and other illicit activities.

JPMorgan Chase clarified that the account freezes are not directly linked to the stablecoin business per se. The bank does offer services to stablecoin issuers and also engages in collaborations with relevant companies. In fact, it recently played a role in assisting a stablecoin issuer in going public.