In the UK, access to banking has become so hard to get to in the past few weeks that crypto companies had to go directly to Prime Minister Rishi Sunak’s government to complain.
According to Simon Jennings, who is the head of the UK Crypto Asset Business Council,
“When cryptocurrency first started, purists said it would bring down the banks, but ironically, it could be the banks that bring it down.”
Bloomberg says that “two people who were there” at a March 8 meeting with Economic Secretary Andrew Griffith at the Treasury said that crypto executives raised the problem of getting access to banks. Griffith said that he would try to solve the problem with banks.
A spokesperson for the Treasury did not say anything about the meeting, but they told Bloomberg that the government would continue to talk with stakeholders about “emerging issues” as the consultation goes on.
The meeting was part of the Treasury’s conversation with people in the digital asset industry after it proposed a new set of rules for the industry in February.
The UK government wants crypto entrepreneurs to grow their businesses in the country, but it’s been hard for them to do so because lenders haven’t been very helpful.
Most people think that the lender is being careful because the industry is facing a number of legal and regulatory problems, mostly because of the failure of a number of crypto companies and the scandals that followed.
But Jeff Hancock, co-founder, and CEO of the London-based cryptocurrency exchange Coinpass, said that,
Rishi and the government say they want to make the UK a hub for crypto, but they can’t do that because they can’t use banks.
As has been reported, major banks in the UK, such as HSBC Holdings and NatWest Group, have limited the amount of money that their customers can move to cryptocurrency exchanges.
And now, the news says that the problem is made worse by a number of big problems. According to “a dozen UK crypto executives” Bloomberg talked to, some of the problems crypto companies have been having are a lot of paperwork and getting their applications turned down.
SavingBlocks, a company that gives passive investors a set of digital asset portfolios, told a news outlet that it tried to get a corporate account with nine different banks but was turned down by seven of them.
The other two have asked for more information, such as a detailed explanation of how the firm checks the transactions of its clients.
Edouard Daunizeau, the CEO of the company, said that,
“There aren’t many options; most traditional banks won’t work with crypto companies, and the recent events will make it even harder.”
Because of how terrible things have gotten, SavingBlocks has made the decision to make an application for licensing in France, where the CEO believes the process may be simpler.
Worries about being locked out
Tom Duff-Gordon, vice president of international policies at Coinbase Global, he quoted as saying that the United Kingdom banking response “has been harsher than the EU response.” One reason could be that the EU has made more progress in setting up its framework for cryptocurrency regulation, with the much-anticipated Market in Cryptoassets (MiCA) regulations set for a final vote this month.
Joe David, the co-founder of the accounting and professional services company Nephos Group, said that Wise locked the company’s account for more than three months, starting in November of last year.
Wise first just said that Nephos broke the rules, but when David asked for more information, Wise pointed him to the section of the user terms that talks about the company’s policy on crypto assets.
Because of this, Nephos had to use subsidiaries to pay bills until the account was finally unblocked. David said, “We now have accounts with two other providers to make sure that if we do get locked out, we can still do business.”
“You can’t pay anyone if you don’t have a bank account.”
There are other things happening in the country that show how the noose is getting tighter around the crypto market.
Some crypto companies, like Coinpass, use payment service providers like Paysafe Financial Services. These companies work under the UK’s money-licensing system, which lets them offer basic services to crypto companies.
Still, in the middle of March, Paysafe said it would stop supporting transactions in GBP for UK customers of the crypto exchange Binance. This meant that these customers couldn’t use bank transfers or credit cards to deposit or withdraw money from the exchange.
Paysafe said at the time, “We’ve decided that the UK’s crypto regulations are too tough for us to offer this service at this time. This is a wise decision made out of an abundance of caution on our part.”
According to data from PitchBook, the amount of venture capital that went into UK digital asset companies in the first quarter was $55 million, down 94% from the same time last year. It was found that the rest of Europe had a 31% rise in the same time period.
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