- UK banks’ reaction to cryptocurrency issues is reportedly “more acute” than that of EU banks
- HSBC and Nationwide recently applied limits to debit purchases of crypto assets
- Prime Minister Rishi Sunak previously said he wanted the UK to become a global crypto hub
Cryptocurrency firms are facing multiple challenges in the United Kingdom as British banks have reportedly required more documentation and other related requirements before allowing companies access to their banking services.
The British government previously expressed hopes to turn the country into a “global” cryptocurrency hub.
“There aren’t many options available — most traditional banks won’t offer banking services to crypto firms,” Edouard Daunizeau, CEO of crypto investing company SavingBlocks, told Bloomberg in a report published Sunday.
UK banks have rejected applications and started requiring loads of paperwork for crypto firms to complete, according to the outlet.
“The UK Banking reaction has been more acute than the EU one,” Tom Duff-Gordon, vice president of international policy at Coinbase, told the outlet in reference to the collapse of FTX and Silvergate. He added that, unlike the current situation of reluctance among British banks, the European Union’s work on digital assets has made banks in bloc members more receptive to cryptocurrency.
Earlier in March, HSBC Holdings and Nationwide Building Society implemented new rules concerning crypto assets. Nationwide began applying daily limits of ₤5,000 (approximately $6,000) for debit card purchases of crypto assets, Bloomberg reported at the time. The bank also banned crypto transactions for credit card users.
HSBC, on the other hand, blocked credit card transactions of crypto purchases in February, according to the outlet. HSBC said in a statement to Bloomberg that the ban was “because of the possible risk to customers.”
Late last year, Santander UK implemented limits in relation to crypto transactions.
“You’ll be restricted to a ₤1,000 (approximately $1,200) limit per transaction, a total limit of ₤3,000 (approximately $3,600) in any rolling 30-day period,” the bank said, citing the Financial Conduct Authority’s (FCA) warning regarding “risks of investing in crypto assets.”
The FCA recently proposed a new set of rules that may see crypto executives serving jail time if they don’t meet conditions related to crypto business marketing. The regulator warned that crypto firms, even those based overseas, “must get ready for this regime.”
NatWest also followed suit, announcing crypto transaction limits in mid-March.
“NatWest is increasing customer protection against crypto-criminals after ₤329m (approximately $405 million) was lost by consumers last year,” the bank said.
NatWest customers have a daily limit of ₤1,000 and a 30-day limit of ₤5,000.
Also in the middle of March, Binance announced that deposits and withdrawals for UK customers would be suspended after Skrill Limited halted Binance’s use of Faster Payments Service transactions. Suspension of deposits and withdrawals for Binance customers in the UK would start May 22, the cryptocurrency exchange platform said.
Meanwhile, there has been pushback from the British crypto industry as entities and individuals called on the government to act on the reaction of banks toward cryptocurrency.
“Many of the major UK banks have now put in place bans or restrictions, and we are concerned that other banks and Payment Services Providers (PSPs) may also soon follow suit,” Su Carpenter, director of operations at digital asset trade advocacy group CryptoUK , said in a letter to Andrew Griffith, UK Treasury’s economic secretary.
Meanwhile, CryptoUK board advisor Ian Taylor told the Financial Times that there is no point in “selling the UK as a place to set up shop” if there is no banking support.
“It’s counterintuitive to the UK’s crypto vision. De-banking the industry could undermine the UK remaining an international hub of fintech,” MP Lisa Cameron told the outlet. Cameron is the chair of the parliamentary group for crypto.
In April 2022, the British government mapped out a plan “to make the UK a global crypto-asset technology hub.” The government said at the time that the plan was part of broader efforts to put the UK in a position that has its financial services sector “at the cutting edge of technology.”
The government added that its vision of the UK being a crypto hub would attract investment and create jobs. Then-Chancellor Rishi Sunak said it was his “ambition” to make the country a “global hub” for the sector. Sunak is the current British prime minister.
Nationwide and HSBC’s crypto transaction limits came on the heels of the collapse of FTX and Silvergate Bank. Earlier this month, CNBC reported that more than $70 billion was wiped from the crypto market in 24 hours after Silvergate crashed.