UK banks have resorted to rejecting applications, freezing accounts, and requesting additional paperwork from crypto firms.
Crypto firms in the United Kingdom are struggling to obtain banking services, Bloomberg reported Sunday, citing multiple sources. Local crypto executives expressed frustration with rejected applications, frozen bank accounts, and overwhelming paperwork.
The situation was exacerbated by the departure of United States-based lenders Silvergate Capital, Signature Bank, and Silicon Valley Banks.
Banking Restrictions Hinder Crypto Firms in the UK
According to the report, the banking issue in the UK has become so dire that some companies have lodged complaints with the government. Despite Prime Minister Rishi Sunak’s efforts to establish the UK as a digital asset hub, local banks are working against this objective.
Edouard Daunizeau, the founder of SavingBlocks, a crypto startup offering a range of portfolios for passive investors, revealed that he had difficulties securing his company’s bank account.
According to the report, Daunizeau was rejected by seven of the nine lenders he approached for a bank account. The two banks that accepted his application have bugged him for additional documentation, seeking details on how he monitors his clients’ transactions.
Joe David, another executive who co-founded crypto-focused accounting and professional services firm Nephos Group, disclosed that money transfer platform Wise Plc froze his company’s accounts for over three months from November, citing a breach in terms and conditions.
After an inquiry, a spokesperson for Wise said the platform does not support companies engaging with crypto and freezes the accounts of clients found to be involved in such activities.
Crypto VC Investment Slumped 94% in Q1
Big banks like HSBC Holdings and NatWest Group have also restricted the amount of money clients can move into crypto exchanges.
With the ongoing banking restrictions, UK lenders are already losing crypto ground to the rest of Europe. Data from venture capital (VC) research company PitchBook revealed that VC investment into digital asset companies dropped by 94% from 2022 to $55 million in Q1, while the rest of Europe saw a 31% increase.
Commenting on the matter, Simon Jennings, executive director at the UK CryptoAsset Business Council advocacy group, said: “When crypto started, the purists were saying crypto will bring down the banks. But ironically, it’s the banks that could bring down crypto.”