UK Lawmakers Demand Banks End Crypto Access Restrictions
Parliament's Crypto APPG writes to UK bank CEOs demanding they justify widespread restrictions on crypto firms' access to banking services, citing barriers to sector growth.
UK lawmakers are applying direct pressure on major banks to justify their restrictions on cryptocurrency and digital asset firms, framing access to banking services as potentially the most significant barrier to the sector’s growth and competitiveness.
Parliament’s Formal Challenge to Banking Sector
The co-chairs of Parliament’s Crypto and Digital Assets All-Party Parliamentary Group—Labour MP Gurinder Singh Josan and Lord Vaizey of Didcot, a former digital economy minister—sent a formal letter to the chief executives of every major UK bank on Tuesday. The letter addresses a persistent and documented pattern: crypto and digital asset firms struggling to establish bank accounts and encountering substantial restrictions on crypto-related transactions.
According to the APPG co-chairs, these barriers extend beyond legitimate risk management concerns and threaten the viability of the nation’s emerging crypto sector. The lawmakers emphasized that limited banking access could undermine the success of the UK’s forthcoming crypto regulatory regime and potentially redirect investment to more accommodating jurisdictions. Lord Vaizey characterized the current environment as “an unnecessary piece of friction” for businesses attempting to operate in the United Kingdom.
Widespread Banking Restrictions Impede Industry Growth
UK banks have intensified restrictions on cryptocurrency-related activities over recent years. Major institutions including HSBC, Nationwide, NatWest, Santander, and Starling have substantially limited crypto-related payments. According to the UK Cryptoasset Business Council, research conducted in January revealed that banks were blocking or delaying approximately 40% of attempted transfers to crypto exchanges.
The scope of these restrictions varies considerably. HSBC, NatWest, Monzo, and Nationwide have implemented monthly caps on transfers to crypto exchanges, ranging between £5,000 and £10,000. In contrast, Starling and Chase UK have adopted even more restrictive policies, barring crypto transfers outright. Banks justify these measures by citing concerns about crypto-related scams and the risk to retail customers of losses stemming from price volatility, particularly given that such losses receive no protection under the Financial Services Compensation Scheme.
Parliamentary Intervention and the Regulatory Horizon
The APPG letter poses six specific questions to each bank, seeking clarity on their current policy toward crypto firms, details about their service to such firms, the specific limitations they apply to crypto transactions, the rationale underlying their approach, whether the incoming FCA regulatory regime will alter their stance, and what government and regulators could do to facilitate banking access.
The lawmakers acknowledged that banks face genuine legal obligations to prevent financial crime and safeguard consumers. However, they argued that many crypto firms contend that risk assessment should center on individual company profiles rather than blanket sector-level restrictions.
This parliamentary action follows a broader inquiry into crypto and digital assets that launched on July 21, with written submissions due August 31. The timing is significant given the UK’s anticipated implementation of a new Financial Conduct Authority regime for cryptocurrency regulation. Without adjustments to banking policy, the restrictive environment may deter companies from establishing UK operations and undermine the nation’s strategy to emerge as a crypto-friendly jurisdiction.
Source: UK Parliament, via Decrypt. Not financial advice.