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UK Banks cracking down on payments to cryptocurrency exchanges

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  • Cryptocurrency ecosystem has continued to face more regulatory scrutiny globally
  • Leading UK banks, like Barclays, Monzo, and Starling are prohibiting payments to virtual currency-related firms
  • The steps taken by the banks came in response to soaring financial crimes
  • Although the authorities are concerning about crimes, cryptocurrency users based in the UK have raised their voices

Cryptocurrency market has performed tremendously since the beginning of the year. Later in May, it faced turbulence. The primary reason behind the recent market crash is the regulatory scrutiny that the cryptosphere is facing globally. Since digital currencies began to get mainstream attention, governments globally began to stricken regulations.

In recent developments, it was observed that few leading banks based in the United Kingdom are blocking transactions of cryptocurrency assets exchanges. According to a spokesperson from the aforementioned banks, the harsh measures taken by the banks aren’t for a longer timeframe.

Why do banks prohibit services to cryptocurrency exchanges?

UK-based banks like Barclays, Monzo, and Starling have prohibited transferring money to cryptocurrency firms. According to a publication of the news outlet The Telegraph, banks are afraid whether such firms have become a hotbed for financial crime.

Starling, a bank that operates online, has suspended all payments to such firms. The bank claims that it observed high levels of suspected financial crime with such payment method. According to the bank, the suspension is for a short period of time and will help protect its clients.

According to a spokesperson from Starling, financial crime is an issue for several banks. Hence, the banks will run a few additional checks specifically for payments to cryptocurrency firms. After the inspections are completed, the services will be reversed. Ultimately, the bank believes that digital firms should be authorized and regulated by the governing authorities.

NatWest is found concerned about digital currency scams

NatWest is another major British bank that has warned its users regarding virtual currency-related scams. The bank claimed that it had received a record count of fraud in the cryptocurrency industry in Q1 2021. However, the banks did continue their skeptical views regarding the sector. Still, a spokesperson from NatWest denied clarifying whether the banks will label cryptocurrency firms as suspicious platforms.

Crypto users are raising their voice over social platforms

Following the banks imposing bans over services to virtual asset exchanges, cryptocurrency users began to raise their voices. On social platforms like Twitter, several individuals were found complaining about crackdowns. 

Among the users, one has claimed that banks are taking such steps as they are afraid of whether they could lose control. 

On the other side, few claimed that criminals existed before the establishment of cryptocurrency and blockchain technology. Following the factor, it is worthless to conclude that the cryptosphere is particularly a financial crime hub.

UK is concerned regarding financial crimes

The residents of the UK know that cryptocurrency is lawless and highly risky. Still, the citizens are advocating such currencies. Following the scenario, the government of the UK was observed concerned for rising crimes.

Source: TheCoinRepublic

The Financial Conduct Authority (FCA) has also warned its users that they might end up losing their hard-earned funds. The regulatory enforcement had been due to ban digital assets firms on an unofficial register at the beginning of this year. However, the authority was able to process only four companies and placed others on a temporary record until July 9, 2021.

Simultaneously, last week the Advertising Standards Agency (ASA) had banned Bitcoin adverts. ASA deemed that the ads published by Luno were not showing warnings that such investments are risky. And the authority ruled against posting such advertisements.

Cryptosphere is facing regulatory concerns

Before the steps being taken by UK banks, China has also stricken regulation for cryptocurrency firms. Other countries like India, Nigeria, and Turkey are also creating harsh rules against cryptocurrencies. 

Source: CoinMarketCap

The recent crash of the entire cryptocurrency market is also an impact of such regulatory scrutiny. However, where few countries are bringing harsh regulations, countries like Australia focus on embracing such currencies. The Australian government believes that things are moving quickly in the cryptosphere, and the country is being left behind. Hence, a lack of policies means the country’s financial sector is being cut off from opportunities. And so, Australia came with a plan to establish a task force to get on moving to a regulatory framework for the underlying technology of cryptocurrencies. 

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