Crypto businesses in the United Kingdom are reportedly encountering difficulties in obtaining banking services, according to insiders who spoke to Bloomberg, as cited by Cointelegraph.
It seems that the few banks still catering to crypto firms are ramping up their requirements, demanding more documentation and in-depth insights into monitoring clients’ transactions.
These companies reportedly face challenges such as applications being denied, accounts put on ice, and a deluge of paperwork to wade through. The recent escalation in difficulties has allegedly prompted some crypto businesses to voice their grievances to Prime Minister Rishi Sunak’s government.
However, these challenges seem to contradict Sunak’s ambition to foster fintech innovation and transform the U.K. into a global cryptocurrency hub.
Tom Duff-Gordon, Vice President of International Policy at Coinbase, told Bloomberg that the U.K. banks’ reaction appears to be more acute than that of their EU counterparts, as cited in the Cointelegraph article. He explained that the European Union’s endeavor to lay down a framework for digital assets is reportedly making banks in other countries more welcoming to crypto firms, according to the same report.
The European parliamentary committee greenlit the Markets in Crypto Assets (MiCA) legislation in October 2022, a significant step since its introduction in September 2020, with the final vote set for this month, as mentioned in the same article.
Data from PitchBook, as cited by Cointelegraph, suggests that venture capital investment in digital asset companies plummeted by 94% to $55 million in the U.K. in 2023, while other European countries have seen a 31% increase. Faced with these challenges, crypto businesses are reportedly turning to payment service providers like BCB Payments and Stripe to keep their U.K. operations afloat.
The Cointelegraph article states that in March, HSBC Holdings and Nationwide Building Society joined the growing roster of U.K. banks that have tightened restrictions on digital assets by prohibiting cryptocurrency purchases via credit cards for retail customers. In the same month, CryptoUK, a self-regulatory trade association, apparently suggested forming a “white list” comprising registered firms in the country as a response to banks limiting or outright banning transactions with crypto companies. CryptoUK expressed concerns about the trend, stating, “We believe that government action is now warranted.”
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