A recent report from the UK revealed that the crypto firms in the region are experiencing challenges in acquiring banking services. Crypto investors in the UK have complained about the lengthy banking procedures that require more paperwork.
They testified that the banks require practical strategies to demonstrate ways crypto firms will monitor all transactions. The changes in the banking sector have impacted to suspension of accounts and rejection of multiple applications from the crypto sector.
The affected crypto entrepreneurs have lodged their claims to the UK authorities, including the office of Prime Minister Rishi Sunak.
Adoption of Restrictive Banking Regulation
In their claim reports, the investors attest that the unwelcoming banking practices outmatched Prime Minister Sunak’s proposal for crypto regulation. The Prime Minister has been on the frontline to push for reforms in the financial sector.
He demanded the implementation of policies that will enable the UK to become a global crypto hub. Sunak’s proposal was supported by the Coinbase vice president of international policy Tom Duff-Gordon who provided a brief report on comparison between the banking sector in the UK and EU.
Duff-Gordon argued that the UK banks are more anti-crypto than the European financial providers. In the EU, banks have embraced receptive measures to attract more crypto investors to the banking sector.
The EU has invested in amending the crypto regulation to uphold financial inclusivity through the market in crypto assets (MiCA) regulation. The legislators have scheduled to conclude the votes for the MiCA rules this month.
Why are Banks in UK Anti-Crypto?
An analysis from PitchBook revealed that the UK experienced a dip in the number of venture capital (VC) in 2023. The analyst observed that the UK’s revenue generated from VC firms amounted to $55 million, a 94% drop from 2022.
On the contrary, VC firms in the European bloc revenue spiked by 31%.The undefined crypto regulation in the UK has subjected crypto firms to diversify their product line.
Some crypto firms, including BCB payment, have integrated payment features to remain afloat amid ongoing regulation pressure. On the contrary, other banks have embraced restrictive measures to flee crypto clients. In March, the leading financial providers HSBC and Nationwide Building Society (NBS) restricted crypto purchases using credit cards.
This decision adversely affected retail consumers in the region who relied on crypto transaction to tackle their real-life challenges. The unfavourable banking regulation for digital assets has challenged a trading association, CryptoUK, to push for the adoption of a whitelist feature to mitigate the banking crisis.
The team mandates the regulators to develop a whitelist element that will be used during the registration of firms. The CryptoUK issued a report that portrayed their disappointment in banking institutions and the existing crypto regulation.
They were more concerned that the other financial institutions and payment service providers would replicate the restrictive measure on digital assets embraced by leading banks in UK. The CryptoUK team has requested the UK government to take corrective action to address the banking concern.
Elsewhere, regulators in the United States have announced plans to implement stringent regulation for American crypto firms in the UK. Under the Financial Conduct Authority (FCA) proposed regulations, the non-compliant firms will face the legal action, including a two-year jail term.
The FCA had reported that the UK banking sector is more poised to experience financial crimes. The FCA team has tasked regulators in the UK to adopt effective strategies to support compliance with the anti-money laundering (AML) measures.