Crypto businesses face difficulties accessing banking services in the UK, according to multiple sources interviewed by Bloomberg. The few banks that still work with crypto firms are asking for more documentation and information on how they monitor customer transactions.
Challenges include applications being denied, accounts being frozen, and being overwhelmed with paperwork. Crypto companies have even complained to the government of Prime Minister Rishi Sunak as the situation worsened in recent weeks. The move goes in the opposite direction of Sunak’s plans to prioritize fintech disruption and turn the UK into a global crypto hub.
“The UK banking reaction has been sharper than the EU one,” Tom Duff-Gordon, Coinbase’s vice president of international policy, told Bloomberg. According to Duff-Gordon, the efforts of the European Union to establish a framework for digital assets are making banks more receptive to crypto companies in other countries. The European parliamentary committee passed the Markets in Crypto Assets (MiCA) legislation in October 2022, nearly two years after it was first introduced in September 2020. Its final vote is scheduled for this month.
Chancellor @RishiSunak has asked @RoyalMintUK to create an NFT that will air in the summer.
This decision shows the forward-looking approach we are determined to take towards crypto assets in the UK. pic.twitter.com/cd0tiailBK
— Her Majesty’s Treasure (@hmtreasury) April 4, 2022
So far in 2023, VC investment in digital asset firms reportedly fell 94% to $55m in the UK, according to PitchBook data, versus a 31% rise in other countries in Europe. . Cryptocurrency companies are turning to payment service providers such as BCB Payments and Stripe to maintain their business operations in the UK.
Related: US Crackdown Will Push Crypto ‘Center of Gravity’ To Hong Kong: Kaiko CEO
In early March, HSBC Holdings and the Nationwide Building Society banned cryptocurrency purchases via credit cards for retail customers, joining a growing list of banks in the country in tightening restrictions on digital assets.
Also in March, self-regulatory trade association CryptoUK proposed creating a “whitelist” of companies registered in the country to tackle banks limiting or banning transactions to crypto companies. “Many major UK banks have now implemented bans or restrictions, and we are concerned that other banks and payment service providers (PSPs) may soon follow suit as well,” CryptoUK said. “We believe that the government’s action is now justified.”
Similar to the United States, authorities in the United Kingdom are tightening regulations on cryptocurrency companies. The Financial Conduct Authority proposed a set of rules in February that could subject crypto company executives to two years in prison if they fail to meet certain conditions related to the promotion.
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