Are Banks Killing UK’s Crypto Hub Ambition?
Cryptocurrency
British banks are increasingly denying cryptocurrency companies access to their services, according to a report.
Despite Prime Minister Rishi Sunak’s pledge to make the UK a global crypto hub – made as chancellor last year – building a Web3 business in the country seems increasingly difficult.
Bloomberg interviewed several people from the crypto sector who said traditional banking players were rejecting applications, freezing accounts and requiring more paperwork around how they monitor customers’ transactions.
“The UK bank response has been more acute than the EU,” said Tom Duff-Gordon, vice president of international policy at Coinbase.
The European Union is introducing Market in Crypto-Assets (MiCA) legislation, which Dante Disparte, head of strategy at Circle, told BusinessCloud “will be to crypto-assets what GDPR was to privacy”.
The legislation applies to all 27 member states and is set for a final vote this month, requiring crypto companies to keep the public informed of their pricing process and trading volumes in real time, and settle all trades on the same day.
In the wake of last year’s collapse of the Terra stablecoin and ecosystem, and the bankruptcy of other high-profile cryptocurrency companies including exchange FTX, MiCA will apply rules and restrictions to stablecoin issuers, plus require exchanges to keep their own funds separate from those belonging to their customers.
The path to this legislation has reportedly enabled a calmer response to crypto firms from banks in the EU.
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In the UK, the government is looking to create crypto regulations that are more similar to those seen in traditional finance. However, several banks are now blocking their retail customers from making crypto investments, or putting a limit on those investments – an approach that is now apparently being extended to business finance.
“There aren’t many options available [in the UK]: Most traditional banks will not offer banking services to crypto firms, Edouard Daunizeau, CEO of London-based crypto investment firm SavingBlocks, told 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.”
Last month, trade association CryptoUK wrote to central authorities and regulators proposing a “white list” of registered firms. The motive is to stop banks from introducing blanket bans on transactions with crypto companies and “instead take a risk-based and case-by-case approach”.
Last week, the UK government pledged to “robustly” regulate crypto as part of plans to fight financial crime. A Treasury and Home Office policy document said the steps highlight its “ambition to make the UK an attractive destination for cryptoassets and cryptoasset innovation in the world…challenging as it is, effective cryptoasset regulation benefits everyone, including consumers and firms”.
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Argentine budget airline Flybondi plans to issue NFTs for all tickets by expanding its partnership with TravelX. It will allow passengers to change their name, transfer or sell tickets linked to NFT independently of the airline.
Entrepreneur Elon Musk has asked a US judge to throw out a $258 billion racketeering lawsuit accusing him of running a pyramid scheme to back the cryptocurrency Dogecoin through tweets, Reuters reports.
Exchange Bittrex is to close its US operations due to “the current US regulatory and economic environment…regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape”.
Singapore-based payments provider Alchemy Pay has raised $10 million from market maker DWF Labs at a valuation of $400 million.
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The total market capitalization of the 23,100 coins is $1.16 trillion at the time of writing (7am UK), a 2.4% decrease in the last 24 hours.
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