U.K. banks threaten cryptocurrency, and that’s bad news for everyone. The Financial Conduct Authority (FCA) of the United Kingdom sent a letter to the CEOs of the country’s largest high street banks. In 2018 to stress the significance of conducting in-depth research. Prior to engaging in business transactions with cryptocurrency companies. The letter emphasized the significance of conducting in-depth research. Before engaging in business transactions with cryptocurrency companies.
This appears to have led to widespread high-risk ratings and restrictions on banking. Related to cryptocurrencies, which has an impact not only on crypto firms. That wish to operate in the United Kingdom but also on investors. This has an impact not only on crypto firms. That wish to operate in the United Kingdom but also on investors.
While it is acceptable and responsible for banks to be careful about fraudulent activities. The current condition causes uncertainty, which makes the banks’ caution somewhat meaningless. Investors in cryptocurrencies need the flexibility to transfer their funds. In whichever manner they deem appropriate. And businesses that deal in cryptocurrencies need access to payment rails. For a variety of other reasons as well, such as the purpose of paying their staff and suppliers.
A catch-22 that is Detrimental to Market Competition
Companies are forced into using payment service providers (PSPs). Because they are denied access to “mainstream” banking. This is because PSPs are also utilized by the gambling industry. Which is considered as a higher risk by financial institutions. There is a lack of clarity within this approach. Due to the fact that banks have a propensity to obstruct any. And all transactions that are carried out through PSPs.
It is detrimental to the general competitiveness of the market for a company. To refuse to handle cryptocurrency transactions for particular services. Such as payment processing. Because this reduces the availability of those services to customers. It would appear that banks are reticent to “derisk” bitcoin and make it simpler to transfer payments. From cryptocurrency to banks because they fear that doing so would cannibalize their existing business. This is because they believe that doing so would result in lower profits. If what you claim is true. Then the authority that is responsible for ensuring. That there is enough competition in the market needs to take some action.
Restriction of Personal Freedoms
The economic risk-reward calculations of banks imply. That despite the fact that these linkages are fraught with danger. They will continue to test the waters by giving financial services to crypto-asset service providers. This is despite the fact that these connections are highly risky. Consider the situation involving Barclays and Coinbase. In which the former company’s provision of faster payment services. To the latter company was unexpectedly canceled after a period of three months.
It’s likely that the prospective financial reward was judged to be insufficient. In relation to the amount of danger that involved.
More and more banks are either entirely banning cryptocurrency payments. Or activating their fraud prevention systems. During these processes, customers called and requested to verify that transactions. That completed with a knowledge of the “risks” associated with using cryptocurrencies. This is an infringement on the freedom of average people. To do whatever they want with their own money. And the risk weighting that given to transactions related to cryptocurrencies. Is not justified in any way, shape, or form to U.K. banks.
The Contradictions Between Banks
There is a substantial amount of interest in cryptocurrency from practically every high street bank. Despite the fact that it is difficult for crypto firms to get bank accounts. And investors’ freedoms are being restrict. On the other hand, that is just on one side of the bank. They are investigating if crypto will be successful from the perspective of institutional investment. But that desire and knowledge is not making its way across the building to the folks. Who are performing transactional banking, which includes retail and corporate banking.
You can’t have your cake and eat it too: The adoption of cryptocurrencies. As a form of institutional investment will limited by the same concerns. You can’t have your cake and eat it too. The banks are behaving in a myopic manner that prevents them. From translating interest in one area into significant procedures across other areas. Which is detrimental to every aspect.
For people interested in cryptocurrency transactions, BCB, Revolut, Clear Junction, and ClearBank. Those are all options for establishing a financial connection or opening a bank account in the United Kingdom. The fact that some payment service providers (PSPs). Which are able to engage with crypto businesses or investors. Despite the fact that they have a bigger risk exposure than other organizations. And have compliance teams that are equal to those of major retail banks demonstrates that it is possible. Banks are failing to recognize the magnitude of this opportunity. As it is an opportunity that has already successfully mined by a small number of firms. To create a landscape that is more competitive.
Banks Disproportionately Penalize Organizations with Little Crypto Operations
Because of the way in which banks see bitcoin. Enterprises who only do a little amount of business in the industry. Are also vulnerable to unfair penalties for their involvement. They are being force to find new ways to access banking and payment services. Along with native crypto users, despite the fact that crypto only accounts for a small portion of their business. Which would otherwise likely risk approved by retail banks. These users are being force to find new ways to access banking. And payment services because they being force to find new ways. To access banking and payment services.
Native speakers of a cryptographic language also included among those. Who required to find these new access points. As a result of a lack of awareness regarding the variety of activities. That take place within the cryptosphere. Businesses in the fields in U.K. banks of accounting and law that participate in cryptocurrency in any capacity. Regardless of how insignificant that participation may be, are susceptible to being subjected. To the same sweeping regulations as cryptocurrency wallets and exchanges.
Government Intervention and Rating Transparency will Assist
We need government intervention immediately. Crypto is gaining popularity and won’t disappear. Then-economic secretary John Glen claimed in April that the U.K. might “lead the way” in crypto and blockchain. The current status of U.K. banks, crypto enterprises, and crypto investors is the largest hurdle. To thriving in this new economy.
The 2018 FCA letter to banks emphasizes due diligence. And says they must upskill their staff to make crypto risk assessments. Nope. On the payments side, there’s minimal upskilling or initiatives to grasp crypto and assess risk. Instead, they’ve implemented a blanket prohibition based on Standard Industrial Classification classifications. Like the gaming business.
The FCA has offered crypto companies licenses. If they can demonstrate AML and KYC processes to operate and transact in the U.K. banks Effective banking links needed to achieve this.
The government wants the crypto business to expand, so it’s here to stay. Banks refusing to service crypto firms or investors is the largest impediment to growth. Without rapid intervention to reveal decision-making and force banking support, U.K. crypto participants must use limited financial services through PSPs or rethink being based in the U.K. Everyone loses.
