UK Banks are Cutting Ties with Crypto Clients
- The banks in the UK are cutting ties with crypto firms, and those who are still working with such clients want them to produce additional documentation.
- The banks are also demanding information regarding the procedure followed by crypto clients for monitoring their customers’ transactions.
- Challenges faced by the crypto firms in the UK include having applications rejected, having accounts frozen, and being overwhelmed with paperwork.
- “The UK banking reaction has been more acute than the EU one,” Tom Duff-Gordon, vice president of international policy at Coinbase, told Bloomberg.
The United Kingdom (UK) aimed to become a major crypto hub in 2021, when the crypto market bull run was in full effect and the popularity of blockchain-based digital assets knew no bounds. However, following the collapse of multiple crypto companies in 2022 and the crash in the price of many coins, coupled with the drop in the popularity of NFTs, the country has decided to gradually distance itself from crypto.
According to a report from Bloomberg citing several sources with knowledge of the matter, the banks in the UK are turning away from crypto companies, and those who are still working with crypto clients want them to produce additional documentation and information regarding the procedure followed by these clients for monitoring their customers’ transactions.
On the other hand, some of the challenges faced by the crypto firms operating in the UK include having applications rejected, having accounts frozen, and being overwhelmed with paperwork. The companies have even complained to the government of Rishi Sunak, who assumed office as Prime Minister of the UK recently and promised to promote the adoption of technology and blockchain in the country.
The situation has worsened in the past few weeks, according to a report from Bloomberg. “The UK banking reaction has been more acute than the EU one,” Tom Duff-Gordon, vice president of international policy at Coinbase, told Bloomberg. The Coinbase executive claims that the European Union’s efforts to establish a framework for digital assets have yielded positive results in other countries where banks have become more receptive to crypto.
As per the data from PitchBook, the venture capital investment in digital asset companies in the UK has dropped 94% to $55 million, while an increase of 31% has been noted in many countries across Europe. In order to maintain their operations in the UK, crypto firms are enlisting the help of payment providers like BCB Payments and Stripe.
Recently, HSBC Holdings and Nationwide Building Society announced that they have banned the purchase of crypto coins with the help of credit cards and joined a growing list of banks in the country to tighten restrictions on digital assets.
Due to these unfavorable circumstances, in March, UK-based lobby group CryptoUK urged regulators to publish a “white list” of registered firms so as to avoid cutting off the industry from mainstream finance and promote a peaceful and profitable relationship between banks and crypto companies.
“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,” said CryptoUK. “We believe that government action is now warranted.”
On the other hand, as earlier reported by BitcoinWisdom, Andrew Griffith, Economic Secretary of the UK Treasury, revealed to the Parliament in March that the Royal Mint, the official maker of British coins, would not create an NFT, and now, the proposal from Sunak is under review. It is crucial to note here that the Royal Mint announced the creation of an NFT, which was supposed to be released in 2022 but never saw the light of day.