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The UK boasts about its relative European dominance in the financial technology (fintech) sector, but its own banks are making life difficult for the country’s bitcoin-related businesses and services.
UK Bitcoin Businesses Forced to Open Accounts in Bulgaria, Poland, and Possibly Toronto
Banking Editor Martin Arnold of the Financial Times noted a trend: “British banks are shunning companies that handle cryptocurrencies,” he writes, “prompting some to question the UK’s ambitions to be a global hub for the fast-growing fintech sector.”
Of those is Metro Bank, a “bank that puts you first,” it claims. It doesn’t seem inclined to put you first if you’re a bitcoin-related business, however.
It recently stopped doing business with Blockex, a cryptocurrency exchange. “Nobody will give us a bank account in the UK,” the company’s Head of Markets told the Financial Times. They’re now scouting locations as far away as Toronto, Canada.
The country’s Financial Conduct Authority (FCA) is equally worried. Chartered to “protect customers, [enhance] market integrity, and [promote] competition”, the independent governance association put a rather fine point on the matter; “We are concerned that denying certain customers bank accounts on a wholesale basis causes significant barriers to entry and could lead to poor competition in certain markets.”
Banks such as Barclays and HSBC retain some cryptocurrency business, though reluctantly. Citing money laundering and general criminality, HSBC said it’s “monitoring the development of virtual and digital currencies such as bitcoin as well as regulations governing their use,” continuing it has a “very limited appetite to bank issuers or dealers in virtual currencies,” Financial Times quotes the bank.
Curiously, Paxful, a peer-to-peer bitcoin buying marketplace, upsells its HSBC account-holders’ ease of use as “the best place to buy bitcoin instantly with HSBC Cash Deposit,” albeit in Australia.
Drug Dealers and Terrorists
Both UK Finance and the EU’s Banking Authority have issued luke-warm to discouraging statements about doing business with bitcoin businesses.
“No regulatory regime is yet in place for virtual currencies. Firms’ own risk appetites will determine to what extent they engage with any firms engaged in virtual currencies,” stated the UK’s banking representative UK Finance.
The EU authority’s comment on bitcoin is rather dated, some three years ago, when they openly wished to “discourage credit institutions, payment institutions and e-money institutions from buying, holding or selling virtual currencies.”
Etoro’s Iqbal Gandham detailed how, “The moment you mention crypto to a bank, it’s like you are a drug dealer.” Etoro has “handled more than $1bn of cryptocurrency trades for clients since adding the asset class to its platform this year,” the Financial Times declared.
Quoting an anonymous bank head, Mr. Arnold writes, “‘When you look on the dark web, everything there is being paid for with cryptocurrencies.’”
“You don’t know who is transferring money in and out. If cryptocurrency goes to Iran and we’re involved then I get shut down,” the anonymous banker said.
Are legacy banks afraid of what bitcoin and cryptocurrencies mean to their future? Or, do they have legitimate concerns? Tell us in the comments below!
Images courtesy of: Sony Wallpapers, FCA, Finance Magnets.