UK lawmakers want answers from banks over crypto access, but industry executives say there could be bigger issues to solve.
The UK’s crypto banking problem may not be banks refusing to serve the sector, but whether their infrastructure is ready, according to Nick Fernando, Co-founder and Director of Aqua Global.
Fernando’s comments follow the All-Party Parliamentary Group on crypto and digital assets (APPG) writing to UK banks to explain their approach to providing services to crypto and digital asset businesses.
In the letter, APPG Co-Chairs Gurinder Singh Josan CBE MP and Lord Vaizey of Didcot, said they heard “repeated instances” of crypto firms struggling to open bank accounts, as well as reports of banks restricting crypto-related payments and transactions.
The APPG described access to banking as potentially one of the “single biggest barriers” to growth for the UK’s crypto industry. It warned that limited banking access could make it harder for licensed firms to grow and potentially influence the decisions of businesses considering investing in the UK.
The group also suggested the problem could be more acute for crypto-related companies than other industries that have experienced difficulties accessing banking services.
The letter was sent ahead of the UK’s new regulatory regime for crypto and digital assets, which is expected to come into effect from 2027.
The APPG wants to know whether the new regulatory regime will change banks’ approach to FCA-authorised crypto firms and whether the government or regulators could take further action to support banking access.
The APPG also stated that it understands banks have legal and regulatory obligations to prevent financial crime and protect consumers, but says that banking decisions should reflect the individual risk profile of a business and not the general sector.
It has therefore asked banks about their current policies towards crypto firms, whether they provide accounts and other services to the sector, any restrictions placed on crypto-related transactions and the reasons behind those decisions.
Is infrastructure the problem?
According to Fernando, banks’ reluctance to work with crypto businesses is partly due to legacy payment infrastructure that was not designed to handle digital assets.
“Many banks simply don’t have the payment plumbing needed to support crypto and digital asset flows properly,” he tells Payment Expert.
Crypto transactions require banks to track where money is going while carrying out the necessary compliance and risk checks in real time.
Fernando says that when banks can’t easily track where funds are moving or connect transactions with customer activity, restricting crypto-related payments can become the safer option.
The problem, he believes, is that digital asset businesses are moving faster than the infrastructure supporting traditional banking, which may not be solved with new regulations.
“If the UK wants to be a serious digital assets hub, banks need the infrastructure to support digital currencies safely, not just the permission to do so,” he said.
Fintechs could benefit
The difficulties facing crypto businesses aren’t new, according to Laurent Descout, CEO and Co-founder of Neo, who has previously highlighted how traditional bank infrastructure struggles to keep pace with modern payment demands.
Descout tells Payment Expert that payment firms have faced similar challenges in recent years, with some turning to fintech providers when traditional banking relationships become difficult to secure or maintain.
He explains that banks still need to manage financial crime risks and meet their compliance obligations, but restrictions on legitimate businesses can limit their ability to grow.
“At the same time, this creates an opportunity for fintechs. Businesses still need accounts, payments and infrastructure to operate, and providers that can offer those services in a more agile way have a real opportunity to grow ahead of the traditional banking sector,” says Descout.
