According to multiple sources interviewed by Bloomberg, cryptocurrency companies have struggled to obtain banking services in the UK. The handful of banks still working with cryptocurrency firms have requested more documents and information on how they monitor customer transactions.
Challenges include rejected applications, frozen accounts, and onerous paperwork. As the situation has worsened over the past few weeks, cryptocurrency companies have even lodged complaints with Prime Minister Rishi Sunak’s government. The move runs counter to Sunak’s plans to prioritize financial technology disruption and make the UK a global crypto hub.
Tom Duff-Gordon, Coinbase's vice president of international policy, told Bloomberg: "The UK banking industry has reacted more sharply than the EU." Easy to accept crypto companies from other countries. A European Parliament committee passed Markets in Crypto Assets (MiCA) legislation in October, nearly two years after it was first introduced in September 2020. Its final vote is scheduled for this month.
According to PitchBook, venture capital investment in digital asset companies in the UK has reportedly dropped 94% to $55 million by 2023, while the rest of Europe has seen a 31% increase. Cryptocurrency firms are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the UK. In early March, HSBC Holdings Plc and the Nationwide Building Society banned retail customers from buying cryptocurrencies with credit cards, joining a growing list of banks in the country tightening restrictions on digital assets.
Also in March, self-regulatory industry association CryptoUK proposed creating a “whitelist” of registered firms in the country to address banks restricting or banning transactions with crypto firms. “A number of major UK banks have now implemented bans or restrictions, and we fear other banks and payment service providers (PSPs) may soon follow suit,” CryptoUK said. "We believe government action is now necessary."
Similar to the US, UK authorities are tightening regulations on crypto companies. The Financial Conduct Authority proposed a set of rules in February that executives at crypto firms could be jailed for two years if they fail to meet certain conditions related to promotions.
