As the U.K. moves closer to formal crypto regulation, the country’s biggest banks are tightening access to crypto platforms — leaving exchanges and customers caught in the middle. Progress on regulation The Financial Conduct Authority (FCA) has started to open the door: 59 crypto firms are now listed as meeting the U.K.’s anti-money-laundering and counter-terrorism-financing requirements, including major exchanges such as Coinbase, Kraken and Gemini. The FCA also launched a consultation last week on rules it aims to implement by October 2027, and Treasury legislation at the end of 2025 extended existing financial rules to cover parts of the crypto industry. But banks’ stance grows more restrictive Despite those regulatory steps, banks appear to be pulling back. A report from the UK Cryptoasset Business Council found that seven of the 10 largest exchanges in the country reported growing hostility from national banks over the past year; the other three said conditions were unchanged. Key findings: - 80% of exchanges reported an increase in customers experiencing blocks or limits on bank transfers in 2025. - 70% said the banking environment is more hostile now than 12 months ago. - The survey found 40% of transactions were blocked or delayed. - One exchange reported nearly $1.4 billion in declined transactions in 2025 due to bank-side rejections. “The debanking of the UK’s digital asset economy is a major obstacle to its growth,” the council wrote, warning that “almost all of the major UK banks and payments services firms currently impose blanket transaction limits or complete blocks to cryptoasset exchanges,” and that the trend is worsening. How banks are responding Policy varies by institution. HSBC, Barclays and NatWest impose limits on the amounts customers can transfer to crypto exchange accounts. Others — including Chase UK, Metro Bank, TSB and Starling — fully block transfers to exchanges. Starling defended its position as customer protection against the high risks associated with digital assets: “Starling does not enable customers to buy or sell cryptocurrencies by debit card, bank transfer in GBP, or by bank transfer in other currencies… We’ve made this decision to help protect our customers.” Starling added that it keeps policies under constant review and noted the FCA’s regulatory review. UK Finance, representing more than 300 banks and financial services firms, told CoinDesk it supports the FCA’s regulatory work and backs stablecoins and crypto custody under robust rules, adding “there is certainly no resistance to crypto from us,” while emphasizing banks’ duty to protect customers and take risk-based decisions against fraud and economic crime. Industry reaction and consequences Exchanges argue the disconnect between regulator registration and banks’ behavior is stifling growth and pushing firms to prioritize other markets. One exchange told the report, “If we are registered with the FCA, it should not be this challenging for U.K. businesses.” Several exchanges declined to comment publicly; the FCA and the Treasury also declined to comment to CoinDesk. What this means The divergence — clearer regulatory intent on one hand and continued de-risking by banks on the other — leaves U.K. crypto firms and retail customers in a difficult spot. Firms face lost business and friction in moving funds, while consumers may find their ability to access regulated exchanges constrained even as the U.K. builds a formal rulebook. With formal rules targeted by 2027 but banks enforcing conservative transfer limits now, the timeline for fully normalizing banking relationships for crypto companies in the U.K. remains uncertain. Read more AI-generated news on: undefined/news

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