UK Banks Reject Crypto Clients: Report
Crypto companies are having trouble accessing banking services in the UK, according to multiple sources interviewed by Bloomberg. The few banks that still work with crypto firms are asking for more documentation and information about how they monitor customer transactions.
Challenges include having applications rejected, accounts frozen and being overwhelmed with paperwork. Crypto companies have even complained to the government of Prime Minister Rishi Sunak, as the situation worsened in recent weeks. The move runs counter to Sunak’s plans to prioritize financial technology disruption and turn the UK into a global crypto hub.
“The UK banking response has been more acute than the EU,” Tom Duff-Gordon, vice president of international policy at Coinbase told Bloomberg. According to Duff-Gordon, the EU’s efforts to establish a framework for digital assets make banks more receptive to crypto firms in other countries. The European Parliamentary Committee adopted the Markets in Crypto Assets (MiCA) legislation in October 2022, almost two years after it was first introduced in September 2020. The final vote is scheduled for this month.
So far in 2023, venture capital investment in digital asset companies is said to have fallen 94% to $55 million in the UK, according to data from PitchBook, compared to a 31% increase in other European countries. Crypto companies are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the UK.
Related: US crackdown will push crypto center of gravity to Hong Kong: Kaiko boss
Earlier in March, HSBC Holdings and Nationwide Building Society banned the purchase of cryptocurrency via credit card for retail customers, joining a growing list of banks in the country to tighten restrictions on digital assets.
Also in March, self-regulatory industry association CryptoUK proposed creating a “white list” of registered firms in the country to address banks that limit or prohibit transactions to crypto companies. “Many of the major UK banks have now introduced bans or restrictions and we are concerned that other banks and payment service providers (PSPs) may soon follow suit,” CryptoUK said. “We believe that the government’s action is now justified.”
Like the US, authorities in the UK are tightening regulations on crypto companies. In February, the Financial Conduct Authority proposed a set of rules that could subject executives of crypto firms to two years in prison if they do not meet certain conditions related to promotion.
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