Leading banks such as Barclays have all blocked their customers from transferring funds to cryptocurrency exchanges. Online challengers like Monzo and Starling have joined them.
According to reports, the British institutions are stopping payments to the crypto sector amid fears of the financial crime opportunities it could present. People in the UK have lost over £60 million in the last year in social media investment fraud scams. Reports indicate that nearly half of those scams involved cryptocurrency.
Recently, Barclays, Monzo and Starling customers have been unable to transfer funds to popular platforms like Binance and SwissBorg.
Representatives at Starling have stated the measure is temporary, put in place for the protection of their customers. They also said they would reverse the measure once they can introduce additional checks for transfers to crypto exchanges.
British crypto skepticism continues
The UK banks’ move comes amid continuing skepticism from the country about cryptocurrencies. Bank of England Governor Andrew Bailey, for one, has referred to them as “dangerous.” His cynical stance on crypto goes back as far as, at least, March 2020. When he advised anyone holding bitcoin (BTC) should “be prepared to lose all [their] money.”
Meanwhile, the financial lobbyist TheCityUK has called for more consumer protection as the number of people owning crypto increases. They recorded that more than 10 million people in the UK have owned digital assets in 2021 so far. A 558% increase from the figure recorded in 2018.
Furthermore, TheCityUK stated that firms that market digital assets to their customers should be both authorized and regulated.
Warnings from other banks
British institutions are not the only ones taking action against cryptocurrency transactions. On May 29, reports revealed that a bank and a card service provider in India issued warnings to its customers regarding crypto-based activities.
Emails from HDFC Bank, the leading private sector bank in India, cited 2018 Reserve Bank of India (RBI) guidelines. More specifically stating that “virtual currency transactions” were prohibited. It also instructed those suspected of “probable virtual currency transactions” to report to their nearest HDFC branch. They threatened to restrict all transactions without further notice if customers did not clarify the nature of their transactions.
Card services provider SBI Card also issued a similar warning email to its customers.
Users were quick to point out that the Indian Supreme Court overturned the RBI banking ban in 2020. As such, the HDFC were citing outdated guidelines.