Table of Contents
Numerous crypto firms report severe reluctance from UK banks to provide them with services.
When newly elected Prime Minister Rishi Sunak stepped into office, he announced the intention of making the United Kingdom (UK) a global crypto hub. The UK banking industry is challenging Sunak’s aspirations. A new report by Bloomberg details numerous crypto firms’ challenges in accessing banking services in the country. Companies report issues such as having applications rejected, accounts frozen and overwhelming amounts of paperwork.
Bloomberg’s report details how banks in the UK restrict crypto transactions and their dealing with crypto firms and exchanges. HSBC and Natwest have recently imposed restrictions on the amount of money their customers are allowed to move onto crypto exchanges. Natwest’s move was reported early in March when the bank argued that restricting the amount of money its customers can move to crypto exchanges protects them against crypto scams and “help protect customers losing life-changing sums of money.”
UK Banks At Odds with PM Rishi Sunak’s Crypto Plans
The overwhelming attitude from UK banks is at odds with Prime Minister Sunak’s plans to prioritize financial technology disruption and is driving crypto firms to seek services from regions more accommodating toward digital assets.
Tom Duff-Gordon, vice president of international policy at Coinbase, told Bloomberg:
The UK banking reaction has been more acute than the EU one.
Duff-Gordon notes the European Union’s efforts to create a regulatory framework for digital assets are making banks in the region more receptive to crypto firms than in other countries.
Bloomberg also reports the accounts of SavingBlock, a DeFi-powered crypto fintech, and its struggles with acquiring services from banks in the country. SavingBlock reportedly applied for a corporate account from nine banking services providers in London and was rejected by seven. The two banks, which did not outrightly deny the firm’s application, have been requesting additional documentation detailing the firm’s client transaction processes, according to SavingBlock CEO Edouard Daunizeau.
Daunizea told Bloomberg:
There aren’t many options available – most traditional banks won’t offer banking services to crypto firms. With the recent string of events, it will be even tougher. We are seeking licenses in France, where we think it will be easier.
The UK banks’ reaction is unsurprising given the Financial Conduct Authority’s (FCA) attitude toward crypto firms. In January, it was reported that the FCA has so far only awarded regulatory approval to 41 of the 300 digital asset-related firms that have registered with the agency. The regulatory agency failed to provide any hard reasons as to why so many crypto firms did not finish their registrations or were just failed to be approved.
It is unclear why banks and regulatory bodies in the UK have become so hesitant in their dealings with crypto firms. The reluctance from banks can be understood given that crypto-assets threaten their business model, citing concerns such as money laundering. A far more plausible explanation is that banks ultimately make money off customer deposits and provide little in return – a model that crypto assets severely disrupted.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.