UK banks are increasingly denying cryptocurrency companies access to their services, according to a report.
Despite Prime Minister Rishi Sunak’s pledge to turn the UK into a global crypto hub – made as Chancellor last year – it seems that it is becoming increasingly difficult to build a Web3 business in the country.
Bloomberg interviewed several people from the crypto sector who said traditional banking players were rejecting applications, freezing accounts and demanding more paperwork around how they monitor clients’ transactions.
“The UK banking reaction has been more acute than the EU one,” said Tom Duff-Gordon, vice president of international policy at Coinbase.
The European Union is introducing Market in Crypto-Assets (MiCA) legislation, which Dante Disparte, chief strategy officer of Circle, told BusinessCloud “will be to crypto-assets what GDPR was to privacy”.
Applying to all 27 member states and set for a final vote this month, the legislation demands that crypto companies keep the public informed about their pricing process and trading volumes in real time, and settle all trades same-day.
In the wake of last year’s collapse of the Terra stablecoin and ecosystem, and the bankruptcy of other high-profile cryptocurrency companies including exchange FTX, MiCA will apply rules and limitations on stablecoin issuers, plus require exchanges to keep their own funds separate from those belonging to their clients.
The road to this legislation has reportedly enabled a calmer reaction to crypto firms by banks in the EU.
In the UK, the government is looking to create crypto regulations more akin to those seen in traditional finance. However several banks now block their retail customers from making crypto investments, or put a limit on these investments – an approach which is now seemingly extending to business finance.
“There aren’t many options available [in the UK]: most traditional banks won’t offer banking services to crypto firms,” Edouard Daunizeau, CEO of London-based crypto investing company SavingBlocks, told Bloomberg.
“With the recent string of events it will be even tougher. We are seeking licences in France, where we think it will be easier.”
Last month trade association CryptoUK wrote to key government figures and regulators proposing a ‘white list’ of registered firms. Its motive is to stop banks from imposing blanket bans on transactions with crypto companies and “instead take a risk-based and case-by-case approach”.