UK Crypto Companies Face Banking Challenges Amid Regulatory Changes
Crypto companies in the United Kingdom reportedly face challenges accessing banking services.
Banks still working with crypto firms are requesting more documentation and information about how they monitor clients’ transactions. Crypto companies are complaining to the government of Prime Minister Rishi Sunak, as the situation worsens.
This situation goes against Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub. This article discusses the challenges that crypto companies are facing and the steps being taken to address these challenges.
Challenges for the crypto companies
According to Bloomberg, crypto companies face challenges in the United Kingdom, including having applications rejected, accounts frozen, and overwhelming paperwork. The few banks still working with crypto firms are requesting more documentation and information about how they monitor clients’ transactions. This has made it difficult for crypto companies to access banking services, hindering their business operations.
Response of U.K. banks
Tom Duff-Gordon, vice president of international policy at Coinbase, said that the U.K. banking reaction has been more acute than the E.U. one. He noted that the European Union’s efforts to establish a framework for digital assets are making banks more receptive to crypto firms in other countries.
So far in 2023, venture capital investment in digital asset companies reportedly dropped 94% to $55 million in the U.K., according to data from PitchBook, against a 31% increase in other countries in Europe. The move by U.K. banks goes against Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub.
In March, the self-regulatory trade association CryptoUK proposed the creation of a “white list” of registered firms in the country to address banks limiting or banning transactions with crypto companies. The association is concerned that many of the major U.K. banks have now put in place bans or restrictions, and it believes that government action is now warranted. Crypto companies are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the U.K.
Similar to the United States, authorities in the U.K. are tightening regulations on crypto companies. In February, the Financial Conduct Authority proposed a set of rules that could subject executives of crypto firms to two years in prison if they don’t meet certain conditions related to promotion.
This move aims to protect consumers and investors in the digital asset space. However, it also makes it difficult for crypto companies to operate in the U.K.