NatWest to limit customers’ crypto payments
Two British companies said on Tuesday they would limit crypto payments for customers, in a move that puts further pressure on a digital asset industry that is rapidly losing regulated financial partners.
NatWest, one of the UK’s biggest consumer banks, announced restrictions on consumers sending money to cryptocurrency exchanges to “help protect consumers who lose their lives changing sums of money”.
Paysafe, an online payments provider, also said it would discontinue services to UK customers of Binance, the world’s largest crypto exchange.
The moves represent a further fraying of the connections between crypto and regulated institutions following the demise of US trio Silicon Valley Bank, Silvergate Capital and Signature.
Banks such as Signature and Silvergate have long been established as popular routes for crypto companies to convert digital tokens into hard currency and hold digital assets on behalf of crypto companies. US authorities have this year repeatedly warned banks about the risks associated with crypto business. But while the banking crisis has focused on the US, several of the UK’s biggest banks have started to step up the pressure on crypto investors.
NatWest has introduced a £1,000 daily limit and £5,000 30-day limit on payments sent to crypto exchanges and follows HSBC’s announcement last month that it would ban customers from buying cryptocurrencies with their credit cards.
“This looks like the start of a coordinated crackdown on crypto, coming from the UK banking sector. We’ve already seen this strategy take shape in the US,” said a former HSBC employee.
Paysafe, which provides British pound deposit and withdrawal services to Binance, ended those services on Monday to new UK customers of Binance, and will stop services to all UK users by the end of May. The company said that “the UK regulatory environment in relation to crypto is too challenging” and its decisions were “taken with an abundance of caution”.
A month ago, Binance suspended USD payments on the exchange without giving a reason for the decision.
“This is the second domino to fall and unlikely to be the last, as now two top financial markets are closed to Binance,” said Jo Ritcey-Donohue, founder of JRD Law, a US law firm. Binance is still active in other countries in Europe, such as France and in South America.
Binance said Paysafe’s decision would cover less than 1 percent of its users. Earlier, it also said the suspension of dollar payments would affect less than 0.01 percent of monthly active users.
The failures of Signature and Silvergate have sparked a hunt for new banking partners willing to accept crypto business.
“The longer it takes a US bank to declare an openness to crypto deposits, the more likely it is that firms may choose a location overseas with more regulatory clarity and easier fiat payment rails,” said Conor Ryder, analyst at Kaiko Research, a data bank . company.
“Clarity in the regulations in Europe . . . draws a stark contrast to the ambiguity in the US, with firms seemingly facing new regulatory headwinds every day. This creates an increasingly challenging environment for the operation of any crypto organization.”
Earlier this week, HSBC bought SVB’s UK unit for £1 in a rescue deal that sees the bank take in more than 3,000 of the subsidiary’s customers.
