British Banks Put Brakes on Government’s Crypto Vision
British Prime Minister Rishi Sunak has grand plans for a crypto hub, but banks in the United Kingdom have other ideas.
According to a Bloomberg report on April 2, banks in the United Kingdom are restricting transactions and their dealings with crypto companies and exchanges.
The report specified that HSBC and Natwest have restricted the amount of money customers can move onto crypto exchanges. Barclays also halted transfers to Binance in 2021.
For the time being, crypto needs fiat on and off ramps. Unfortunately, that means relying on banks and limiting transactions is just one tool in the high street bank’s arsenal.
Several crypto executives have reported problems dealing with banks in the UK. According to the report, the issues ranged from excessive paperwork to bureaucratic hurdles to having applications rejected.
Blockade by British Banks
London-based crypto firm SavingBlocks cited difficulties in dealing with banks. The crypto passive portfolio firm applied for a corporate account with nine different banking service providers. It was turned down by seven of them, according to Bloomberg.
Company founder Edouard Daunizeau said, “there aren’t many options available,” before adding, “most traditional banks won’t offer banking services to crypto firms.” He is considering a move to more friendly climes in Europe.
“With the recent string of events it will be even tougher. We are seeking licenses in France where we think it will be easier.”
“The UK banking reaction has been more acute than the EU one,” said vice president of international policy at Coinbase, Tom Duff-Gordon.
Banks generally harbor a lot of disdain for crypto because it threatens their business model. They cite money laundering concerns, but the reality is that banks make money from other people’s money and give little in return.
In April 2022, Prime Minister Rishi Sunak announced an initiative to attract crypto firms to the UK. However, the banking blockade is making life very difficult for them.
Furthermore, crypto venture capital funding has slumped in the UK. Conversely, it remains relatively healthy across Europe.
Jeff Hancock, CEO of London-based crypto exchange Coinpass, said the restricted access to banking “hampers any effort to make the UK a crypto hub, which is what Rishi and the government say they want.”
Payments Providers an Alternative
As a result, crypto companies are turning to payment providers such as Stripe and Wise. However, they too are subject to financial regulations, which often restrict them from dealing with crypto firms.
Economic Secretary Andrew Griffith said in early March that the Treasury “would try to resolve the problem with lenders.”
Until then, Britain’s banks continue to strengthen their chokehold over the fledgling crypto industry.
