HSBC and Nationwide are the latest banks to limit their customers’ crypto purchases

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(Kitco News) – Relations between the banking and crypto communities continue to deteriorate as two leading UK banks, HSBC Holdings and Nationwide Building Society, have announced new restrictions on the purchase of cryptocurrencies by their customers.

Bloomberg was the first to report the story on Thursday, saying the move to limit certain crypto purchases comes in response to warnings from UK regulators and the struggles the industry has experienced over the past 18 months.

Nationwide released an update to customers regarding the new limits. “We have set some limits on cryptocurrency purchases with your card,” they wrote. “These will apply where we identify payments to crypto exchanges.”

For adults with up-to-date accounts, there is now a daily limit of 5,000 British pounds ($5,987) on debit card purchases of crypto assets, and credit cards can no longer be used for crypto transactions. These limits apply every time a customer uses their card to make a payment, and that includes using digital wallets such as Apple Pay or Google Wallet.

Account types affected by this change include FlexStudent, FlexGraduate, FlexBasic, FlexAccount, FlexDirect and FlexPlus. Those with a FlexOne account will only be able to spend £100 ($120) per day for crypto purchases.

Any attempt to spend more than this amount on cryptocurrency on any given day will result in a declined transaction, the bank said. For joint accounts, the daily limits apply to each card, and for those with multiple accounts, the limit will apply to each account.

Last month, HSBC sent an email to customers informing them that they will no longer be able to buy crypto with their credit card, citing “the potential risk to customers.”

“From 23 February 2023, we will no longer allow the purchase of cryptocurrency with our credit cards,” HSBC said in an email to customers. “This is because of the possible risk to you. The Financial Conduct Authority has warned against investing in crypto-assets as they are considered very high-risk speculative investments.”

Nationwide and HSBC have joined a growing list of UK banking institutions that have placed restrictions on engagement with crypto services, including Santander, Natwest Group and Lloyds Banking Group.

Binance, the top crypto exchange globally, is the primary target of many of the restrictions as it dominates the crypto trading landscape and has a presence in more than 140 countries. In August 2021, HSBC banned credit card payments to Binance, citing concerns about the exchange’s regulatory status.

These actions by UK-based banking institutions follow the release in February of proposed regulations for the handling of cryptocurrencies in the UK. The regulatory framework outlined in the report aims to achieve four overarching policy objectives: Encourage growth, innovation and competition in the UK; enable consumers to make well-informed decisions, with a clear understanding of the risks involved; protect financial stability in the UK; and protect UK market integrity.

In February, the Financial Conduct Authority (FCA) also announced a crackdown on illegal crypto machines (ATMs) operating in the country, taking down several unregistered ATMs and eliminating another access point for buying crypto, and a proposal by the FCA that could see crypto executives sentenced to two year’s imprisonment if they break rules relating to the marketing of cryptocurrency products.

Ever since the collapse of FTX, global regulators have increased their warnings and enforcement measures against the crypto industry in an effort to protect investors. This includes actions by the Financial Stability Board, the International Monetary Fund and the Financial Action Task Force, all of which have repeatedly warned banks about the risks cryptoassets pose to the traditional financial system.