British banks at odds with government plans to attract crypto firms

British Prime Minister Rishi Sunak has big plans for a crypto hub, but UK banks have other ideas.

According to a Bloomberg report on April 2, banks in the UK are restricting transactions and their dealings with crypto companies and exchanges.

The report specified that HSBC and Natwest have limited the amount of money customers can move to crypto exchanges. Barclays also stopped transfers to Binance in 2021.

For now, crypto needs fiat on and off ramps. Unfortunately, that means trusting banks and restricting transactions is just one tool in the high street bank’s arsenal.

Several crypto leaders have reported problems dealing with banks in the UK. According to the report, problems ranged from excessive paperwork to bureaucratic hurdles to having applications rejected.

Blockade of British banks

London-based crypto firm SavingBlocks cited difficulties in dealing with banks. The passive crypto portfolio company applied for a business account with nine different banking services. It was rejected by seven of them, according to Bloomberg.

Company founder Edouard Daunizeau said, “there are not many options available,” before adding, “most traditional banks will not offer banking services to crypto firms.” He is considering moving to friendlier parts of Europe.

“With the latest series of events, it will be even tougher. We are seeking licenses in France where we believe it will be easier.”

“The UK bank response has been more acute than the EU,” Coinbase vice president of international policy Tom Duff-Gordon said.

Banks generally have a lot of disdain for crypto because it threatens their business model. They cite concerns about money laundering, but the reality is that the banks make money on 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 bank blockade makes life very difficult for them.

Furthermore, crypto venture capital funding has fallen in the UK. Conversely, it remains relatively healthy across Europe.

Jeff Hancock, chief executive of London-based crypto exchange Coinpass, said the limited access to banking services “hinders any efforts to make the UK a crypto hub, which is what Rishi and the government say they want.”

Payment providers an alternative

As a result, crypto companies are turning to payment providers like Stripe and Wise. However, they are also subject to financial regulations, which often restrict them from trading with crypto firms.

Finance Secretary Andrew Griffith said in early March that the Treasury “would try to resolve the issue with lenders.”

Until then, UK banks continue to tighten their stranglehold on the nascent crypto industry.