Crypto companies crushed by wary UK banks

UK Prime Minister Rishi Sunak’s cryptocurrency plans have reportedly hit a few snags.

As Bloomberg News reported on Sunday (April 2), crypto companies are already dealing with pushback from major UK banks such as HSBC and NatWest, which in February set limits on how much money UK customers can transfer to digital asset exchanges.

Now, crypto firms say they are encountering new banking problems, such as rejected applications for redundant paperwork, leading the companies to petition the government for help.

“There are not many options available – most traditional banks will not offer banking services to crypto firms,” ​​said Edouard Daunizeau, CEO of London-based crypto investment firm SavingBlocks, in an interview with Bloomberg.

“With the latest series of events, it will be even tougher. We are seeking licenses in France where we believe it will be easier.”

The UK government last year announced plans to turn the country into a “global hub” for cryptocurrency companies.

While the country has had three leadership changes since then, Sunak’s elevation to prime minister in October 2022 was met with enthusiasm among crypto enthusiasts due to his support for the “hub” plan during his time as chancellor.

However, a lot has happened in the digital asset sector since then, including the fall of FTX, the collapse of two crypto-friendly banks and an increase in regulatory pressure on Binance, the world’s largest cryptocurrency exchange.

In March, HSBC and Nationwide Building Society announced a ban on cryptocurrency purchases using credit cards for their retail customers, while also introducing tougher restrictions on debit card purchases of crypto to a daily limit of $6,000.

(HSBC last month announced plans to buy – and invest $2.1 billion in – failed lender Silicon Valley Bank’s UK operations.)

And despite Sunak’s support for the industry, the country’s financial watchdog – the Financial Conduct Authority (FCA) – has for years branded crypto as high risk, even threatening crypto leaders with prison if they break certain rules.

“The cryptocurrency sector has yet to take the proverbial magic rabbit out of the top hat,” PYMNTS wrote in March. “Audiences, having bought tickets to the show, now realize they may walk away empty-handed as their hard-earned money disappears.”

Instead of revolutionizing the financial world as the technology’s proponents promised, the industry has instead been rocked by “bad actors and backdoor platforms, making the future more uncertain than ever.”