HSBC and Nationwide block transactions with crypto exchanges
HSBC Holdings and Nationwide Building Society joined major UK banks in banning the purchase of bitcoin and other cryptocurrencies via credit card following a recent regulatory push. The move is another blow to crypto traders who recently saw a significant number of banks decide not to finance the shaky asset class.
The decision follows several of the biggest UK banks banning cryptocurrency transactions in recent months, as part of a global crackdown led by major lenders and credit card issuers. While HSBC and Nationwide are not the first, but the action exacerbates the pressure and makes it harder for enthusiasts to buy into the market as more banks may soon follow suit.
Describing the activity as “high risk and widely used for criminal purposes,” HSBC told cardholders they are no longer allowed to buy crypto or receive incoming transfers from related exchanges or merchants.
Following the bankruptcy of FTX, the world’s second largest cryptocurrency exchange, Lloyds, Barclays and RBS cut card purchases and transactions involving cryptocurrency. Banks fear that allowing the purchase of cryptocurrencies using money borrowed from credit cards could leave them on the hook if the buyers’ efforts were wrong and they could not repay the debt.
Santander UK, the British unit of banking giant Banco Santander, also placed restrictions on crypto transactions for its customers. In a note to customers, the bank said this includes a £1,000 limit on individual transactions with crypto exchanges and a £3,000 limit on total monthly transactions. However, the London-based bank does not restrict funds transferred from crypto exchanges back to Santander accounts.
Nationwide customers are also limited to a £5,000 limit on individual cryptocurrency transactions using debit card purchases.
Even before the FTX fallout, many UK banks banned their customers from transferring funds to Binance after the Financial Conduct Authority (FCA) issued a warning that it was not allowed to carry out any regulated activity.
Taking the lead from City Watchdog, many retail banks in the UK have since announced that they will stop customers from making payments to crypto trading platforms. However, customers have been left frustrated as these banks not only banned withdrawals to crypto exchanges but also blocked money transfers from exchanges to their bank accounts.
