UK Banks Are Now Turning Away Crypto Clients• April 4, 2023 2:56 pm • Comments
It looks like crypto companies that are doing business within the United Kingdom are going to start having harder times going forward.
This is because a lot of UK banks are now actively trying to not provide banking services for crypto companies such as freezing their accounts and rejecting their applications.
As a result, there are only a small number of banks that are still willing to do business with crypto firms, but they have extremely high restrictions.
Due to this, many are concerned that this will likely drive many crypto firms to move their operations outside of the UK to overseas instead which will slow down the growth of the crypto industry in the UK.
Some believe that this will also soon happen in the United States as regulatory authorities continue their aggressive agenda against crypto.
BREAKING: UK banks are turning away crypto clients: Report.
Choke Point 2.0 is real and we are witnessing just the beginning. Prepare yourself: #Bitcoin Self-custody is key. https://t.co/sNX68OhEIv
— Carl ₿ MENGER ⚡️🇸🇻 (@CarlBMenger) April 3, 2023
Challenges include having applications rejected, accounts frozen and overwhelming paperwork. Crypto companies have even complained to the government of Prime Minister Rishi Sunak, as the situation worsened in the past weeks.
The move goes in the opposite direction of Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub.
“The U.K. banking reaction has been more acute than the EU one,” Tom Duff-Gordon, vice president of international policy at Coinbase, told Bloomberg. According to Duff-Gordon, the European Union’s efforts to establish a framework for digital assets are making banks more receptive to crypto firms in other countries.
The European parliamentary committee passed the Markets in Crypto Assets (MiCA) legislation in October, nearly two years after it was first introduced in September 2020. Its final vote is scheduled for this month.
As a result of the difficulty of doing business in the UK, the numbers are already showing a decrease in investments in the region this year.
Compared to other regions in Europe which are experiencing an increase in investments, it is clear that what the banks are doing will have consequences for the crypto industry.
Speculators believe that this may be intentional as the banks seek to preserve the traditional banking system instead of losing clients to crypto.
Earlier in the past year, some banks had also banned the purchase of crypto using credit cards which greatly reduces the number of retail owners of digital assets.
It is unclear if there will be any changes to these new rules in the near future, but it seems that crypto will still likely continue to expand despite regional blockers.
NEWS: UK crypto startups are struggling to find banks willing to service them.https://t.co/9HCMDhRrH7
— Blockworks (@Blockworks_) April 3, 2023
Earlier in March, the HSBC Holdings and Nationwide Building Society banned cryptocurrency purchases via credit cards for retail customers, joining a growing list of banks in the country to tighten restrictions on digital assets.
Also in March, the self-regulatory trade association CryptoUK proposed the creation of a “white list” of registered firms in the country to address banks limiting or banning transactions with crypto companies.
“Many of the major U.K. banks have now put in place bans or restrictions, and we are concerned that other banks and Payment Services Providers (PSP’s) may also soon follow suit,” said CryptoUK. “We believe that government action is now warranted.”
Similar to the United States, authorities in the U.K. are tightening regulations on crypto companies. The Financial Conduct Authority proposed in February a set of rules that could subject executives of crypto firms to two years in prison if they don’t meet certain conditions related to promotion.
‼️🇬🇧 UK banks are closing accounts because people bought “crypto assets that are perfectly legal” – Circle VP
Has your bank account been closed? 🤔
— Bitcoin Archive (@BTC_Archive) April 3, 2023
Join the conversation!
We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.