Crypto firms struggle to find banking services in the UK amid increasing regulations and risk aversion
Declining Support from Banks
The collapse of several crypto-friendly American banks has diminished the industry’s access to the traditional financial system, sparking concerns that crypto might be on its way out, particularly in the US. The reduced number of banks accepting crypto has limited the options for companies to store their customers’ assets.
Crypto’s Struggles Beyond the US
The trend, referred to as “Operation Chokepoint” by some on social media, isn’t limited to the US; British banks are also growing increasingly cautious about crypto.
Major UK banks like NatWest have imposed restrictions on the flow of money between crypto exchanges and their platforms. Additionally, online payments provider Paysafe announced it would discontinue services for UK customers of Binance, the largest crypto trading platform, citing a challenging regulatory environment.
Industry Appeals to the UK Government
CryptoUK, a lobbying group, has expressed its concerns about blanket bans and restrictions on transfers between UK banks and crypto asset platforms. The group has urged the government to explore a path forward, including facilitating meetings between banking and crypto executives. This request comes as the UK government has shown explicit support for embracing crypto.
Potential Risks and Challenges
There are concerns that banks’ risk aversion may inadvertently harm UK consumers. By limiting the crypto industry’s access to traditional financial services, businesses may be driven offshore, making it more difficult to track money or executives. Moreover, despite banks performing KYC and AML checks for crypto companies in the UK, there has been no explicit guidance from authorities on the risks associated with accepting crypto business.
Banks’ Reluctance and Crypto’s Reputation
Convincing banks to embrace crypto remains a tough proposition, as banks are private and commercially driven entities. Some argue that the industry’s outcry may negatively impact crypto’s reputation. CryptoUK’s credibility has also been questioned due to controversies involving its members, such as Binance’s run-ins with the Financial Conduct Authority. However, some insiders believe that the UK government may be adopting a “wait-and-see” approach to digital assets, allowing others to make mistakes first before entering the fray.
Suggested Reading :
- CFTC Files Complaint Against Binance and Executives – What we know so far
- Binance Braces for Potential Fines from US Regulators
- SEC Cracks Down on Binance.US for Operating as Unregistered Securities Exchange: Will Cryptocurrency Survive Regulatory Onslaught?
- Federal Reserve Chairman Jerome Powell’s Bold Endorsement: Proper Regulation Could Unlock Stablecoins’ – Potential in Financial Sector
- Hong Kong plans to make crypto purchase and trading legal for all of its citizens
- Crypto Industry is Under Siege by Regulators
