Summary
- The All-Party Parliamentary Group on Crypto and Digital Assets has contacted leaders of major UK banks to clarify their stance on crypto businesses.
- The correspondence includes six inquiries, questioning potential changes in policy once the FCA regulations are implemented.
- This initiative follows a parliamentary investigation that began on July 21, with public submissions accepted until August 31.
The co-chairs of the Crypto and Digital Assets All-Party Parliamentary Group have reached out to the chief executives of all significant banks in the UK, seeking clarification on their treatment of cryptocurrency and digital asset companies.
The letter, dispatched on Tuesday by Labour MP Gurinder Singh Josan and Lord Vaizey of Didcot, a former minister for the digital economy, states that the group has encountered "numerous instances where crypto and digital asset firms have faced challenges in establishing bank accounts with UK banks," along with reports indicating that several banks have limited crypto-related transactions.
"Access to banking services could represent one of the most significant obstacles to the growth of UK crypto and digital asset enterprises, potentially jeopardizing the effectiveness of the UK's upcoming crypto regulatory framework," the co-chairs noted, emphasizing that restricted access might influence companies' decisions on investing in the UK.
The letter poses six inquiries to each bank: their policy regarding crypto firms, whether they currently serve such companies or the reasons for not doing so, the restrictions placed on crypto transactions, the factors influencing their policies, whether the new regulatory framework will alter their stance, and what support the Government or regulators could provide.
Josan and Vaizey acknowledged that banks have legal responsibilities to combat financial crime and safeguard consumers, but many firms assert that decisions should be based on an individual company's risk profile rather than the industry as a whole. Vaizey expressed to the Financial Times that the challenges faced by these firms represent "an unnecessary obstacle" to conducting business, highlighting it as a barrier for anyone looking to launch a company in the UK.
Several UK banks, including HSBC, Nationwide, NatWest, Santander, and Starling, have restricted crypto-related payments in recent times. Research from the UK Cryptoasset Business Council revealed in January that banks were blocking or delaying approximately 40% of attempted transfers to crypto exchanges.
Banks cite a rise in crypto scams and the risk of retail customers losing substantial amounts due to price volatility as reasons for their actions, as reported by the FT. Currently, banks like HSBC, NatWest, Monzo, and Nationwide impose monthly limits on transfers to crypto exchanges ranging from £5,000 to £10,000, while Starling and Chase UK prohibit them entirely. Losses incurred in crypto investments are not protected by the Financial Services Compensation Scheme.
Government Response
HM Treasury has acknowledged the issue, with Economic Secretary Lucy Rigby stating in March that under the new regulatory framework, the Government "would not expect" FCA-licensed firms to encounter restrictions from banks "solely due to their sector."
The letter follows the APPG's inquiry into banking access initiated on July 21, which is collecting written evidence until August 31 before reporting back to the Government. The co-chairs clarified that the letter does not aim to pre-empt the inquiry's findings. The FCA finalized its regulations for the sector in June, with the new rules set to take effect in October 2027.
The issue of crypto debanking has also arisen in other markets, with U.S. firms attributing their banking difficulties to a campaign they refer to as Operation Chokepoint 2.0, and Kraken successfully obtaining $22 million from an auditor that it claimed abandoned it during this period.