When crypto companies in the UK apply to various banks for access to various services, their applications are frequently denied, and they are needed to provide further paperwork. These companies face a number of obstacles and difficulties. (1)
It all started in February, when HSBC Holdings plc and National Westminster Bank, also known as simply NatWest (LON: NWG), declared that they would be placing limits on customers’ ability to purchase digital currencies.
In particular, NatWest imposed a daily limit of £1,000 and a 30-day limit of £5,000 on payments that can be made to cryptocurrency exchanges, and HSBC forbade its customers from purchasing cryptocurrencies using credit cards.
The banks in the UK have said that the restrictions they are taking are because of the speculative and dangerous nature of digital assets, and this is the motivation behind the actions.
A spokesman for NatWest had the following to say:
“When it comes to profiling cryptocurrency exchanges, we take a risk-based approach.
This indicates that we may choose to limit the ability to make payments to particular exchanges based on the level of risk that we believe they provide to us.
We do not divulge all of the safeguards we have in place to guarantee that we will continue to protect our clients from the ever-changing dangers posed by criminals.
Another customer bank, Paysafe Limited, which facilitates online transactions, announced that it would discontinue serving customers in the United Kingdom of Binance, the most important cryptocurrency exchange in the world.
According to the company’s explanation, “the regulatory landscape in regard to cryptocurrency in the UK is too complex,” and the decision to withdraw from the market was made “out of an abundance of caution.”
The United Kingdom is Increasing the Strictness of Cryptocurrency Regulations.
After the failure of Signature Bank and Silicon Valley Bank in the US, which impacted the UK, banks in the UK increased the amount of pressure they put on cryptocurrency startups.
As a direct consequence, many cryptocurrency businesses are mulling the possibility of relocating to Europe, where banks are more open to cryptocurrency transactions.
For instance, Edouard Daunizeau, the Chief Executive Officer of SavingBlocks, which is situated in London, is currently applying for a license in France.
Companies dealing in cryptocurrencies in the United Kingdom have lodged complaints with the administration of Prime Minister Rishi Sunak, who has long been a supporter of the cryptocurrency industry. This comes as a response to the limits imposed by banks.
Incidentally, prior to becoming Prime Minister in October 2022, Rishi Sunak was quite optimistic about the health of digital assets when serving as a Chancellor in the government of Boris Johnson.
This is notable since Rishi Sunak became Prime Minister in October 2022. In April 2022, he even mentioned the possibility of the United Kingdom becoming a center for the development of crypto assets technology.
However, a lot has transpired since then, including the demise of FTX, the failure of the two largest banks in the US, and an increase in the amount of pressure exerted on Binance by the regulatory authorities.
At the same time that Europe is getting ready for the final vote on its Markets in Crypto Assets law (MiCA), the United Kingdom is working to make its crypto regulations more stringent.
Earlier, the British government was working on issuing a non-fungible token in addition to putting stablecoins under its regulatory umbrella. In addition, they were working on this.
Despite this, the UK Treasury Department announced a month ago that it would no longer move forward with its initial intentions, citing the widespread uncertainty that exists within the cryptocurrency industry.
In addition, the Financial Conduct Authority of the United Kingdom (FCA) presented a proposal to Parliament in February for a “financial promotions regime.”
The document includes the requirement to obtain authorization from the FCA to advertise the assistance or have waivers under the Financial Promotion Order. In the event that the standards of advertisement services are not met, the offender faces a possible jail sentence of up to two years.