The surge in UK banks limiting the usage of cryptocurrency transactions has ‘deeply concerned’ self-regulated organisation CryptoUK, which wrote a letter to the Economic Secretary of the Treasury, Andrew Griffith.
CryptoUK Director of Operations, Su Carpenter, wrote to the head of the Treasury to outline that the growing ban UK banks are enforcing upon crypto-related payments will “fundamentally undermine the government’s ambition to become a crypto asset hub”.
However, in recent weeks, UK banks such as Natwest, Santander, Lloyds, and most recently HSBC, have all placed bans or limitations on transactions made for or using cryptocurrencies with either debit or credit cards.
“CryptoUK and its members have attempted to engage constructively with the banks through UK Finance for several months during which time we have seen more banks announcing their decisions to block or limit transactions,” read the CryptoUK statement.
“Many of the major UK banks have now put in place bans or restrictions, and we are concerned that other banks and Payment Services Providers (PSP’s) may also soon follow suit.
“We believe that government action is now warranted because banks are implementing blanket bans or restrictions instead of taking a risk-based and case-by-case approach.”
Since Rishi Sunak assumed the position of Prime Minister back in October 2022, he has intensified his efforts from his previous role as Chancellor to help the UK become a hub for crypto and digital asset innovation.
The UK has increased its developments looking into defined guidelines for a potential crypto regulation bill, as well as moving forward with plans to introduce a central bank digital currency (CBDC) into the wider population.
Despite this, banks within the UK are growing more wary of cryptocurrencies and digital asset usage as they still stand unregulated and continuously cite the Financial Conduct Authority’s (FCA) warning that they are a risk to customers.
Carpenter and CryptoUK are urging the government to consider solutions to help resolve the situation with the banks and have called upon crypto firms to come together to work in tandem with regulators and the banks themselves.
The statement added: “Our members want to work constructively with the banking sector and believe there are a number of potential solutions that can be explored, including creating a “white list” of platforms that have engaged with the UK’s regulatory perimeter, to which transactions should be allowed to take place freely.
“We urge the Government to take action as, left unaddressed, these measures will inhibit Web3 innovation and tech development in the UK, which we understand to be one of the core pillars of the Government’s plan for economic growth.”