UK MPs demand bank disclosures on crypto account access

UK lawmakers have asked the chief executives of every major British bank to disclose how they treat crypto businesses and related payments. Parliament is examining whether banking restrictions are limiting the sector ahead of the country's 2027 regulatory regime.

The Crypto and Digital Assets All-Party Parliamentary Group said Tuesday that its co-chairs, Labour MP Gurinder Singh Josan and Lord Vaizey of Didcot, had written to bank executives after hearing repeated accounts of digital asset companies struggling to open or maintain banking relationships in the UK.

The letter asks banks to explain whether they currently provide accounts to crypto firms, the reasons for refusing them where they do not, and any limits placed on transactions involving digital asset platforms. Banks were also asked what factors determine those policies and whether the incoming UK crypto rules could change their approach.

Josan and Vaizey said access to banking services "could be one of the single biggest barriers to growth for UK crypto and digital asset businesses." The issue, they argued, could also affect the effectiveness of the regulatory framework scheduled to become mandatory in October 2027.

For companies deciding where to establish or expand their operations, the lawmakers said difficulty obtaining basic banking services could also influence decisions about investing in the UK.

The latest letters form part of an inquiry the APPG opened on July 21 into bank accounts and payment services available to crypto and digital asset businesses. The inquiry is examining whether banks have restricted crypto companies from accessing accounts and whether payment controls affecting the sector are proportionate to the risks involved. Written submissions from banking, payments, fintech and crypto companies are being accepted through Aug. 31.

The APPG plans to submit a report containing its findings and recommendations to the government after reviewing the evidence. Josan and Vaizey said their questions to individual banks were not intended to determine the outcome of that inquiry before the evidence process has finished.

Six areas are covered by the letter. Along with asking banks to state their current policies toward crypto companies, lawmakers want to know whether the institutions serve such businesses at present and, if not, why they refuse to do so. Banks were also asked to disclose any restrictions they impose on crypto-related payments, explain the considerations behind those controls and say whether FCA authorization under the forthcoming regime would cause them to reconsider their policies.

The final question addresses the role of public authorities, asking what action the government or financial regulators could take to help banks provide services to legitimate crypto businesses.

Josan and Vaizey acknowledged that banks remain responsible for preventing financial crime and protecting customers. Crypto businesses, however, have argued that account decisions should be made using the risk profile of each company rather than its association with the digital asset industry.

Speaking to the Financial Times, Vaizey described the current difficulties as "an unnecessary piece of friction" for companies operating in Britain. He said banking access had become one of the obstacles facing entrepreneurs seeking to establish crypto businesses in the country.

Several large British banks have restricted payments involving cryptocurrency platforms over recent years, generally citing fraud, scam activity and consumer protection concerns.

Research published by the UK Cryptoasset Business Council in January estimated that banks were blocking or delaying about 40% of attempted transfers to cryptocurrency exchanges.

According to the Financial Times, HSBC, NatWest, Monzo and Nationwide have placed monthly limits on transfers to crypto platforms, with caps ranging from £5,000 to £10,000 depending on the bank. Starling and Chase UK have prohibited such payments altogether.

Banks have linked their restrictions partly to losses from crypto-related scams and the possibility that customers could lose substantial amounts through volatile digital asset markets. Unlike eligible deposits and certain regulated financial products, cryptocurrency losses do not receive protection through the Financial Services Compensation Scheme.

The APPG inquiry is examining both sides of the issue, including the financial-crime and consumer-protection requirements imposed on banks and the effect that account restrictions can have on crypto businesses seeking to operate in Britain.

The distinction has become more important as firms prepare for a system under which regulated crypto activities will move further inside the UK financial services framework.

The FCA set out the next stage of its crypto rulebook in June, giving companies a defined application period before the new system takes effect. Under the FCA's June framework, businesses seeking to carry out regulated crypto activities can apply for authorization from Sept. 30, 2026, until Feb. 28, 2027. The full regime is expected to take effect on Oct. 25, 2027.

Trading platforms, custodians, intermediaries, stablecoin issuers and companies involved in regulated staking activities will fall within the new framework. Existing registrations under the UK's anti-money laundering system will not automatically convert into authorization under the new rules, requiring affected companies to submit new applications or seek changes to their existing permissions.

The framework also covers areas including market conduct, disclosures, custody, prudential requirements and protections for customers.

Some overseas crypto companies are already expanding their regulated presence in Britain before the new rules become mandatory. Robinhood, for example, secured FCA registration in early August under the existing anti-money laundering regime, allowing it to provide covered crypto services in the country before the new authorization system begins.

More than 50 crypto companies were registered under the existing FCA system when Robinhood received its approval. Registration under that regime confirms compliance with applicable anti-money laundering requirements but does not remove the requirement to obtain authorization once the new framework becomes effective.

HM Treasury has already addressed concerns that regulated crypto companies could continue facing banking restrictions after meeting the FCA's licensing requirements. Economic Secretary Lucy Rigby told Parliament in March that once the new framework is operational, the government "would not expect" FCA-authorized crypto firms to face restrictions from banks "simply because of the sector they belong to."

Complaints over access to financial services have not been limited to Britain. US crypto companies previously alleged that banks and other service providers cut ties with the industry during what executives have called Operation Chokepoint 2.0.

In July, Kraken secured a $22 million arbitration award against former auditor Mazars USA after the audit firm withdrew from its nearly completed 2022 audit. Kraken co-CEO Arjun Sethi linked the dispute to Operation Chokepoint 2.0, a term used by parts of the US crypto industry for alleged regulatory pressure that encouraged banks, auditors and other financial service providers to distance themselves from digital asset companies.

Sethi said Mazars ended its work despite finding no fraud, raising no concerns about Kraken's management and reporting no disagreements with the company. He argued that losing the audit affected access to banking relationships, licensing procedures and other services that financial companies depend on.