A UK parliamentary group warns that banks refusing services to crypto firms could undermine the country's upcoming crypto regime. HSBC, NatWest, and others impose limits or bans.
Alpha Score of 60 reflects moderate overall profile with moderate momentum, moderate value, moderate quality, strong sentiment.
Some British lawmakers are telling banks they are blocking the cryptocurrency sector's growth. The crypto and digital assets all-party parliamentary group sent a letter to lenders pointing to "repeated instances" of crypto companies struggling to open bank accounts. The group asked banks to publish their policies on digital asset services.
Access to banking "could be one of the single biggest barriers to growth for UK crypto and digital asset businesses," the letter said, as reported by the Financial Times on Tuesday. It warned that the situation could "undermine the success of the UK's forthcoming crypto regime."
That regime refers to new crypto regulations set to take effect next year under the Financial Conduct Authority. Crypto companies have long argued that opening and maintaining bank accounts in England is too difficult. They also object to the limits or outright bans banks place on transfers from crypto traders to crypto firms.
Banks say they are protecting customers from fraud amid a proliferation of crypto scams. They also cite the risk of retail investors losing money due to price swings. Bitcoin and ether have each dropped roughly half over the past year, the FT noted.
Several lenders impose caps on how much customers can send to crypto exchanges. HSBC, NatWest, Monzo and Nationwide all have such limits. Starling and Chase UK have full bans on transfers to crypto platforms, citing consumer protection and anti-fraud measures, the FT said.
The tension between regulators and lenders is not unique to Britain. In the US, some big banks are taking the opposite approach. Wells Fargo (WFC, Alpha Score 60) plans to offer tokenized deposits to corporate clients this fall. J.P. Morgan and Citi have similar efforts. "Stablecoin issuers have demonstrated that funds can move across borders and outside banking hours," the FT noted. "Banks are responding by applying similar technology to deposits that remain within regulated institutions."
The FCA's new crypto regulations are set to take effect in 2024. Whether the banking bottleneck will ease remains an open question for UK digital asset firms. For broader context, see the crypto market analysis and the list of best crypto brokers for UK-based traders.
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