Big Financial Services are stifling Prime Minister Rishi Sunak’s vision of Britain as a global crypto hub, Bloomberg wrote on Sunday.
According to a dozen UK crypto executives interviewed by Bloomberg News, major banks are rejecting applications a lotso much so that cryptocurrency firms have begun petitioning Sunak for help.
“Most traditional banks will not offer banking services to crypto firms,” said Edouard Daunizeau of crypto investment platform SavingBlocks in an interview with the newspaper. “With the latest series of events, it will be even tougher,” he said, alluding to the collapse of crypto-friendly US banks Signature and Silvergate.
Daunizeau said he sought licenses for his company in the EU instead, which has presented a more unified effort to establish cryptocurrency policy under the bloc-wide Markets in Crypto Assets (MiCA) legislation.
Sunak must be alarmed by the Big Bank’s warfare against crypto companies and the potential exodus of UK based crypto companies, right? Not necessarily.
In the Sunak dictionary, crypto is something of a misuse of words. And Britcoin – the so-called pound-pegged stablecoin currently being consulted on – is a clever portmanteau, but it’s very misleading.
Britcoin sits in the basket of digital currencies called CBDCs, i.e. Central Bank Digital Currency.
While it’s true that Britcoin and dozens of other CBDCs being developed by central banks around the world use blockchain technology similar to bitcoin, the similarities end there.
There is a very good reason why governments are keen to introduce CBDCs – rather than posing a threat to traditional monetary systems as cryptocurrencies like bitcoin subjectively could, they significantly increase the level of control the government has over the money supply.
If anything, Britcoin could pose a threat to a currency far more private than crypto could ever hope to be: cash.
The implications of having digitally printed pounds sent straight to your account from the Treasury should be obvious. Your spending habits can be monitored or even restricted.
Say a person on benefits tries to buy a pack of smokes from the local off-licence; Britcoin can effectively block any such transaction.
What about fiscal stimulus? The government can impose a time limit on using Britcoins to ensure they are pumped into the economy as and when needed.
Such are the possibilities of the digital ledger. Are Big Financial Services at odds with this idea? I doubt it.
British banks turn on crypto companies
Proaktiv has previously reported on restrictive measures against the crypto sector by UK banks.
Nationwide Building Society implemented restrictions on its customers’ ability to buy cryptocurrencies in March, with Current Accounts getting a daily limit of £5,000 and FlexOne accounts will only allow £100 in daily transfers.
In November 2022, Banco Santander (LSE:BNC) capped payments to crypto exchanges at £1,000 per transaction with a total limit of £3,000 in a rolling 30-day period.
HSBC’s head of media Ankit Patel told Coindesk last April that “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from virtual currencies”.
In the same month, NatWest began refusing to serve business customers who accept payments in cryptocurrencies, including bitcoin.
