Uniswap Bank Account Closed by JP Morgan
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Hayden Adams, CEO and founder of popular decentralized exchange Uniswap (UNI) has recently come out and stated that his JP Morgan Chase bank accounts were closed without any explanation or reason given.
Adam’s tweet has created an industry wide discussion of the power that banks have over the cryptocurrency sector in regards to ease of access to traditional financial services and gateway systems between legacy systems and web3/De-Fi sectors. Several prominent figures were quick to join in the conversation on Twitter such as Jesse Powell, CEO of the Kraken. Powell responded with a tweet of his own from 2018, when Chase closed the Kraken exchange payroll bank account with five days notice by mail.
Brian Quintenz, former U.S. Commodity Futures Trading Commissioner (CFTC), also joined the conversation adding that banks do not need to provide explanations when shutting down accounts that they deem “too risky,” and that he sees it as a “shadow de-banking of crypto by the U.S. Federal Reserve and the U.S. Office of the Comptroller of the Currency (USOCC).”
The “shadow de-banking” of Uniswap raises questions behind JP Morgan’s motives. Banks typically assess a business’ or an individual client’s risk based on their regulatory compliance and background checks. JP Morgan Chase could see Adams’ accounts as non in-compliance due to Uniswap operating outside of regulatory jurisdiction.
The U.S. Financial Industry Regulatory Authority (FINRA) requires that broker-deals (exchanges) must register with them before facilitating any client’s trades. Uniswap and other decentralized exchanges (DEXes) typically operate without registering with these governing bodies or running typical know your customer (KYC)/anti-money laundering (AML) reporting. When using a DEX funds are stored directly in a user’s wallet and not on the exchange itself, and therefore allows users to not have to register with the DEX before using it.
While Adams’ has yet to report any updates to his situation, the Chase Support team was quick to respond on Twitter and provide assistance.
