The Hongkong and Shanghai Banking Corporation (HSBC) and National Building Society have joined the growing list of mainstream UK banks that have restricted crypto purchases. Both banks have barred customers from using credit cards to buy crypto, while Nationwide has reduced the debit card transaction limit for crypto to £5,000. These decisions follow efforts by the UK Financial Conduct Authority (FCA) to standardize the digital asset industry and regulate the use of cryptocurrencies, which the FCA deems as “high risk”.
The FCA‘s 82-page industry guideline, published on Wednesday, stipulates that all crypto companies must undergo a fresh assessment requirement, and their records must be updated at all times. The FCA also expects crypto asset businesses marketing to UK customers, including firms based overseas, to comply with these new regulations. However, crypto will not receive a new regulatory body in the UK, and it will be fully governed by the Financial and Market Services Act (2000). The Her Majesty’s Treasury wants the crypto industry and the traditional finance sector to operate on the same level playing field.
Barclays, NatWest, Santander, and Lloyds have already implemented some form of restriction toward crypto. Previously, the restrictions were primarily targeted at Binance, which has been at loggerheads with the FCA since June 2021 over what the regulator deems as “weak customer protections”.UK banks are taking precautionary measures to protect their customers from exposure to cryptocurrencies following the fall of FTX, which has resulted in a contagion effect beyond the crypto market. Silvergate Bank, a US-based bank that became the gateway for financial institutions to access crypto, announced this week that it strongly considers the ability to carry on activities as a going concern. Over the past two years, Silvergate has become the preferred gateway for crypto among financial institutions.
The founder of FTX, Sam Bankman Fried, held a personal account at Silvergate, which potentially implicates her in ongoing money laundering investigations. Following the collapse of FTX, the bank's $14.1 billion digital asset treasury has depleted to under $400 million as customers scrambled to mitigate their losses.
However, some crypto users believe that completely severing integration ties could stifle innovation in the trillion-dollar crypto market. The FCAs efforts to standardize the digital asset industry in the UK aim to mitigate the risks associated with the use of cryptocurrencies, which could otherwise pose a threat to the traditional finance industry.
In conclusion, UK banks have introduced measures to limit their customers' exposure to cryptocurrencies following the FCAs efforts to standardize the digital asset industry. The FCA's regulations require all crypto companies to undergo a fresh assessment and to update their records at all times. While some crypto users fear that these restrictions could stifle innovation in the market, the FCA's efforts aim to mitigate risks associated with cryptocurrencies and ensure that they operate on a level playing field with the traditional finance sector.
As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!
iOS: t.ly/UUCj
Android: t.ly/cfYt
