Challenges for crypto companies range from having applications rejected, and accounts frozen, to being overwhelmed with paperwork.
According to a number of reports, cryptocurrency companies in the UK are having difficulty using banking services. The few banks that are still cooperating with crypto companies want more proof and details on how they keep track of customer transactions.
Having applications rejected, accounts frozen, and an abundance of paperwork are all difficulties. As the situation deteriorated over the previous few weeks, cryptocurrency companies even complained to Prime Minister Rishi Sunak's administration. The decision runs counter to Sunak's aspirations to promote financial technology disruption and turn the United Kingdom into a major crypto hub.
According to Tom Duff-Gordon, "The U.K. banking reaction has been more severe than the EU one." Duff-Gordon claims that banks are becoming more receptive to crypto companies in other nations as a result of the European Union's initiatives to create a framework for digital assets. The Markets in Crypto Assets (MiCA) legislation was approved by the European Parliament's committee in October, nearly two years after it was initially proposed in September 2020. This month is when it will be decided.
According to research, venture capital investment in digital asset startups has reportedly decreased by 94% to $55 million in the U.K. thus far in 2023, while rising by 31% in other European nations. To continue operating in the United Kingdom, cryptocurrency companies are turning to payment service providers like Stripe and BCB Payments.
Related: US crackdown will push crypto ‘center of gravity to Hong Kong: Kaiko CEO
Early in March, HSBC Holdings and Nationwide Building Society prohibited retail customers from purchasing cryptocurrencies using credit cards, joining a rising number of institutions in the nation that have tightened their regulations on digital assets.
In an effort to address banks restricting or forbidding transactions with cryptocurrency companies, the self-regulatory trade group also suggested in March the formation of a "white list" of registered companies in the nation. There are currently bans or limitations in place at several of the main U.K. banks, and the statement reads, "We are afraid that additional banks and Payment Services Providers (PSPs) may soon follow suit." "We think that government intervention is now necessary."
Authorities in the U.K. are strengthening controls on cryptocurrency businesses, much like those in the United States. The Financial Conduct Authority proposed in February a set of rules that could subject executives of crypto firms to two years in prison if they don’t meet certain conditions related to the promotion.
(ANA PAULA PEREIRA, Cointelegraph, 2023)