According to various people interviewed by Bloomberg, cryptocurrency companies are having difficulty acquiring banking services in the United Kingdom. The few banks who are still cooperating with cryptocurrency companies are asking additional documentation and information about how they monitor their clients' transactions.
The difficulties include having applications rejected, accounts blocked, and an abundance of paperwork. As the situation has deteriorated in recent weeks, cryptocurrency companies have even complained to Prime Minister Rishi Sunak's government. The move runs counter to Sunak's ambitions to emphasize financial technology disruption and make the U.K. a global cryptocurrency exchange.
"The U.K. The banks reaction has been more severe than the EU reaction, according to Tom Duff-Gordon, vice president of international policy at Coinbase. According to Duff-Gordon, the European Union's efforts to build a framework for digital assets are making banks in other nations more amenable to crypto businesses. The European Parliament's Committee on Markets in Crypto Assets (MiCA) legislation was ratified in October, over two years after it was initially proposed in September 2020. The final vote is set later this month.
According to PitchBook data, venture capital investment in digital asset startups has decreased 94% to $55 million in the United Kingdom so far in 2023, compared to a 31% increase in other European countries. To sustain company operations in the United Kingdom, cryptocurrency companies are turning to payment service providers such as BCB Payments and Stripe.
Earlier this month, HSBC Holdings and Nationwide Building Society prohibited retail customers from purchasing cryptocurrencies with credit cards, joining a growing list of banks in the country tightening limits on digital assets.
In March, the self-regulatory trade association CryptoUK advocated the formation of a "white list" of registered firms in the country in response to banks restricting or prohibiting transactions with cryptocurrency companies. "The majority of the major U.K. Banks have now implemented prohibitions or limits, and we are concerned that additional banks and Payment Services Providers (PSPs) will follow suit soon," CryptoUK stated. "We believe that government intervention is now necessary."
Authorities in the United Kingdom, like those in the United States. Crypto companies face tighter rules. In February, the Financial Conduct Authority suggested a series of rules that could sentence CEOs of cryptocurrency firms to two years in prison if they fail to meet specific promotion standards.