HSBC and Nationwide are moving to ban the use of credit cards for purchases of cryptocurrencies, which comes amid growing regulatory scrutiny of cryptocurrencies in the UK.
The newest banks to take action in response to recent warnings issued by the United Kingdom (UK) regarding the cryptocurrency business are Nationwide Building Society and HSBC Holdings.
The two financial institutions have instructed their retail clients not to use their credit cards while acquiring cryptocurrencies.
HSBC Cites Regulatory Constraints Regarding Cryptocurrency
It is important to highlight that their action represents the general situation in the UK, at least insofar as banks are concerned with cryptocurrency.
This is the case because it reflects the broader situation. According to a study published (1) by Bloomberg not so long ago, financial institutions are exercising extreme caution to avoid getting in trouble with the law.
It is important to remember that UK regulators have lately issued stringent warnings in response to mounting worries about the cryptocurrency industry. Even more so considering the ongoing scandals that have rocked the sector on a global scale.
According to recent reports, this would result in Nationwide imposing daily limits of 5,000 British pounds ($5,965) on the use of debit cards for the purchase of cryptocurrency assets.
The financial institution has categorically prohibited the usage of credit cards for cryptocurrency transactions.
In February, HSBC followed suit by prohibiting purchases of cryptocurrencies made with credit cards made by its clients.
Also, the bank stated at the time that the action was made with the intention of shielding consumers from the dangers linked with crypto assets.
In the meantime, both banks are defending their recent choices by asserting that they are in accordance with the recommendations of the Financial Conduct Authority (FCA) regarding the safety of customers.
Regulation of Cryptocurrencies in the UK
Because the authorities in the UK are not willing to take any chances with cryptocurrency enterprises, they have been cracking down on these organizations in a systematic manner.
In February, the Financial Conduct Authority (FCA) proposed a set of rules that would subject leaders of crypto businesses to potential prison sentences of up to two years.
This is the case if it is discovered that they are lacking in particular parts of their business, such as promotion.
The FCA had written these words at the time:
“Cryptoasset companies that offer their products or services to consumers in the UK, including companies based in other countries, are required to prepare ready for this regime.”
The FCA made it abundantly apparent that all suppliers of cryptocurrency exchanges and operators of cryptocurrency ATMs are required to obtain the appropriate registration.
In addition, they act according to the country’s anti-money laundering (AML) regulations.
In any case, for what it’s worth, a consultation paper regarding the forthcoming cryptocurrency regulation in the UK has been published. In addition, the report’s content suggests that the United Kingdom wishes to position its financial services industry at the frontline of crypto.
But, in addition to this, it is also attempting to steer clear of stringent control legislation on crypto so that it does not inhibit innovation.
HSBC and Nationwide are the UK’s most recent banks to limit customers’ access to cryptocurrency-related services. Santander, the Natwest Group, and Lloyds Banking Group are a few examples of the others.