UK Banks Refusing To Work With Crypto Companies

The recent collapse of the three US banks, i.e., Silicon Valley, Silvergate, and Signature, has left US crypto clients with fewer options for their crypto transactions. But they are not the only ones who are experiencing problems with finding suitable banking partners.

The UK has had a crypto banking issue since 2021. Recently, crypto companies are finding it even more challenging to get the banking services they need, as many UK banks have restricted their interactions with the crypto sector. But why would UK banks do such a thing and miss out on the ever-growing potential of crypto?

Today, we will discuss why UK banks refuse to work with crypto companies and see which ones are implementing restrictions. But before we do that, let’s first look at the UK crypto market in more detail to get a grasp on how many people are affected by this.

How Big Is the UK Crypto Market?

According to the latest data, over 6.2%, or 4.2 million British citizens, own some form of cryptocurrency. Out of these 4.2 million, 40% have an income over £200,000, putting the majority of UK crypto owners in the wealthier categories.

Moreover, 62.35% of UK crypto owners chose Bitcoin as their preferred cryptocurrency, with Ethereum following in second as the choice for 36.67% of the crypto-owning population.

Additionally, 24.87% of non-crypto owners in the UK cite a lack of support for cryptocurrency by their merchants as the reason why they don’t hold crypto, while 70.22% of them don’t know how and where to start investing.

Why Do UK Banks Restrict Crypto Transactions?

In essence, UK banks restrict crypto transactions for three primary reasons:

  • Bad actors: This term has been popularized with the rise of crypto and the frequent ‘pump-and-dump schemes‘that some people often engage in. Namely, banks are concerned with customers who might file chargebacks or default on the crypto purchase they made as a result of the high volatility of the crypto market. In this situation, when the value of the cryptocurrency they have purchased suddenly goes down, crypto owners will try to get their money back from the bank, resulting in high-volume withdrawals that no bank wants to experience.
  • Money laundering: The crypto market has lax regulations, which some may take advantage of to perform illegal activities. Of course, money laundering is present in traditional banking as well. However, it is way more difficult to track or detect illicit crypto activities compared to regular ones due to the anonymity of cryptocurrencies, and it’s even more complex to penalize the bad actors accordingly.
  • Complexity: Some banks refuse to handle crypto transactions because they do not think that it’s financially worthwhile. Specifically, to ensure a safe banking environment and protect themselves against bad actors and illegal schemes, banks would have to create a whole new set of processes and protocols that are suitable for safeguarding crypto transactions. However, as the crypto sector continues to expand and banks realize that there is much to be gained from it, they may change their outlooks on the crypto market.

Which UK Banks Do Not Work With Crypto Companies?

Major UK banks refuse to work with crypto companies, hindering their growth and financial operations in the country. In addition, the development has raised concerns regarding the future of digital currencies and their integration into various industries, including eCommerce, legal services, logistics and transportation, and entertainment.

For example, some of the best casinos in the UK have started accepting crypto, allowing users to enjoy a seamless gaming experience. Yet, unfortunately, the current banking situation could potentially impact the widespread adoption of cryptocurrencies in such sectors.

Moreover, 47% of the banks in the UK do not support any form of crypto, while most regulated banks restrict crypto transactions and exchanges. The list of banks that do not work with crypto companies includes:

  • First Direct
  • Metro Bank
  • Halifax
  • HSBC
  • Santander
  • Starling Bank
  • The Co-operative Bank
  • TSB Bank
  • Virgin Money
  • Wise
  • Fire (Ireland)

 What Makes a Bank Crypto-Friendly?

In essence, a crypto-friendly bank is one that enables its customers to buy, sell, and hold cryptocurrencies on their debit or credit accounts. Additionally, a crypto-friendly bank should partner with popular cryptocurrency exchanges, which will enable customers to buy and sell crypto from their bank accounts directly.

Moreover, the bank should have relevant policies in place that do not restrict the number of crypto transactions customers can make.

Also, the best crypto-friendly banks have favorable terms for crypto owners, such as low transaction fees and the acceptance of numerous cryptocurrencies. Additionally, they monitor the crypto market regularly and adjust their policies and restrictions in accordance with the latest developments in the crypto world. But does such a bank even exist in the UK?

Luckily, the answer is yes! Here is a list of some of the best crypto-friendly UK banks that offer excellent services to crypto owners:

  • Revolut
  • Monzo
  • Xace
  • Cashaa
  • Orounda
  • Royal Bank of Scotland
  • NatWest
  • Barclays

The latest developments in the UK show us that most UK banks limit crypto transactions or don’t work with crypto companies. However, there are great crypto-friendly UK banks you can use for your crypto investments. Still, you should closely follow what your bank does, especially since even crypto-friendly banks could end up embracing the crypto restrictions most major UK banks implement.