UK Banks Clamp Down on Crypto: Investor Access Restricted
UK Banks Tighten Grip on Crypto Payments
A growing number of cryptocurrency investors in the United Kingdom are facing difficulties funding their accounts due to increased scrutiny from banks. This highlights the ongoing regulatory and banking challenges within the digital asset sector.
An IG Group survey revealed that 40% of UK crypto investors reported their bank had either blocked or delayed payments to a crypto provider. Of those affected:
- 29% filed complaints with their banks.
- 35% switched lenders as a result.
The survey, which included 500 crypto investors and 2,000 adults, also showed that 42% opposed banks intervening in crypto transactions, while 33% supported such measures.
Michael Healy, IG’s UK managing director, stated, “We’re in a damaging position where millions of people are effectively being locked out of crypto just because of who they bank with. This kind of behavior is at best anti-consumer, at worst anti-competitive — and it’s not backed by the public.”
Regulatory Landscape and Banking Restrictions
While cryptocurrency trading remains legal in the UK, funding accounts presents a significant obstacle. Crypto firms must register with the Financial Conduct Authority (FCA) as virtual asset service providers to operate legally. Only FCA-authorized companies can facilitate fiat on- and off-ramps in British pounds.
Several major banks, including Chase UK and NatWest, have implemented stricter policies, restricting or outright blocking payments to crypto exchanges under the guise of fraud prevention.
Adding to these challenges, the FCA has prohibited retail customers from using borrowed money, such as credit cards, to purchase digital assets, further limiting funding options.
UK Falling Behind in Crypto Innovation?
These banking restrictions arrive amidst growing criticism regarding the UK’s overall approach to digital assets. Former Chancellor of the Exchequer and current Coinbase advisor George Osborne has cautioned that the UK risks “falling behind in the crypto race,” potentially undermining its position in global financial services.
Osborne highlighted the lack of progress in the stablecoin market, noting the dominance of the US dollar in the $288 billion market, while pound-denominated stablecoins account for a mere $616,000 in circulation, according to CoinGecko.
Despite these concerns, the FCA recently lifted its ban on retail trading of crypto exchange-traded notes (ETNs), effective Oct. 8, citing the maturation of the digital asset sector.