Companies that work with cryptocurrencies face several challenges, including having their accounts blocked or their applications rejected as a result of the UK tightening its grip on crypto regulations.
According to some sources, access to banking services is difficult for UK-based crypto firms. The few remaining banks that work with cryptocurrency companies want more assurance and information on how they track consumer transactions. A large amount of paperwork blocked accounts and rejected applications are all obstacles. As the situation worsened in recent weeks, Bitcoin companies even expressed their displeasure to Prime Minister Rishi Sunak’s office.
The decision goes against Sunak’s goals of fostering financial technology innovation and making the United Kingdom a significant crypto center. According to Tom Duff-Gordon, vice president of international policy at Coinbase, banks are becoming more receptive to cryptocurrency companies outside the EU because of the EU’s initiatives to establish a framework for digital assets. “The U.K. banking reaction has been more acute than the European Union one,” he added.
The European Parliament’s committee(EPC) adopted the Markets in Crypto Assets (MiCA) legislation in October, nearly two years after it was first put out in September 2020 with a final decision expected in April.
PitchBook figures show that venture capital investment in companies using digital assets has plummeted 94% to $55 million in the United Kingdom while increasing 31% in other European countries. To stay in business in the UK, cryptocurrency businesses rely on payment service providers such as Stripe and BCB Payments. HSBC Holdings and Nationwide Building Society joined a growing list of institutions across the country in early March when they prohibited retail customers from purchasing cryptocurrencies with credit cards.
In March, the self-regulatory trade association Crypto UK proposed a “white list” of permitted businesses in the country in response to banks restricting or prohibiting transactions with crypto firms. “Many of the major UK banks have now implemented prohibiting or restrictions, and we are concerned that other banks and Payment Services Providers (PSPs) will follow suit soon,” Crypto United Kingdom added. Authorities in the UK, like those in the United States(US), are tightening regulations on Bitcoin(BTC) businesses. In February, the Financial Conduct Authority(FCA)published a set of rules that, if broken, could land the heads of cryptocurrency firms in prison for two years.