HSBC, Nationwide Join Growing List of Banks Restricting Crypto in the UK
Hongkong and Shanghai Banking Corporation (HSBC) and National Building Society, on Thursday, became the latest financial institution in the UK to restrict crypto. Both banks officially barred all crypto purchases by customers using credit cards, with Nationwide cutting down debit card transaction limits involving crypto to 5000.
The decision comes on the hill of recently announced efforts by the UK Financial Conduct Authority (FCA) to standardize its digital asset industry, especially regarding the use of cryptocurrencies which it refers to as “high risk.”
“Crypto asset business marketing to UK customers, including firms based overseas, must get ready for this regime.” – The FCA remarked.
Other resolutions in the 82-paged industry guideline published on Wednesday comprise a fresh assessment requirement for all crypto companies and a mandatory update of records at all times. Crypto will get no new regulatory body in the UK and will be fully governed by the Financial and Market Services Act (2000). Her Majesty’s Treasury wants crypto and the traditional finance industry to operate on the same level playing field.
Already mainstream banks like Barclays, NatWest, Santander, and Lloyds have put in operation one form of restriction or the other towards crypto following the decision. Prior restrictions carried out by banks, including HSBC, had primarily been targeted at Binance, which has remained at loggerheads with the UK regulatory agency since June over what the FCA refers to as “weak customer protections.”
Following the fall of FTX, which has resulted in a contagion effect beyond crypto, UK banks are taking precautionary measures to protect customers from threatening levels of exposure, affecting their balance sheets.
US-based Silvergate Bank became an example of a side effect of rampant exposure this week after it announced that it strongly considers the ability to carry on activities as a going concern. Over the last two years, Silvergate became crypto’s most preferred gateway to financial institutions.
Sam Bankman Fried, the embattled FTX founder, had held a personal account at Silvergate, potentially implicating her in ongoing money laundering investigations. Its $14.1 billion digital asset treasury has since been depleted to under $400 million as customers scampered to mitigate losses on the hill of FTX collapse.
Still, a section of crypto users believes completely severing integration ties run the risk of stifling innovation around the space, which has become a trillion-dollar marketplace over the last decade.
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