UK Lawmakers Accuse Banks of Hindering Crypto Sector’s Growth

Some British lawmakers say the country’s banks are impeding the cryptocurrency sector’s growth.

As the Financial Times (FT) reported Tuesday (Aug. 11), these lawmakers warn that lenders’ refusal to offer services to crypto companies and investors is one of the largest obstacles to the digital asset sector’s expansion in the U.K.

The report cites a letter to the banks from the crypto and digital assets all-party parliamentary group which points to “repeated instances” of crypto companies struggling to open bank accounts and asked for lenders to set out their policies on providing services to digital asset businesses.

A lack of access to banking services “could be one of the single biggest barriers to growth for UK crypto and digital asset businesses,” the letter said, and could “undermine the success of the UK’s forthcoming crypto regime.”

That’s a reference to the introduction of new crypto regulations in the U.K., set to come into force next year under the purview of the country’s Financial Conduct Authority.

As the FT notes, crypto companies have for years argued that opening and maintaining bank accounts in England is too difficult, while also complaining about the limits – or outright bans – banks place on transfers from crypto traders to crypto companies.

The report added that banks contend that they are protecting customers from fraud risk amid a proliferation of crypto scams, while also keeping retail customers from potentially losing large amounts of money due to crypto price volatility. The price of the two biggest tokens, bitcoin and ether, are down by about half in the last year, the FT added.

Lenders like HSBC, NatWest, Monzo and Nationwide place limits on how much their customers can send to crypto exchanges. Banks such as Starling and Chase UK have bans on those types of transfers, citing consumer protection and anti-fraud measures, the FT said.

In related news, PYMNTS wrote earlier this week about the “widening contest” among American banking giants “over who will provide the digital money used for corporate payments.”

This came after Wells Fargo announced plans to begin offering tokenized deposits to select corporate and commercial customers this fall, putting it in competition with the likes of J.P. Morgan Chase and Citi.

“Stablecoin issuers have demonstrated that funds can move across borders and outside banking hours,” the report said.

“Banks are responding by applying similar technology to deposits that remain within regulated institutions. That distinction goes to the center of the emerging competition.”