UK banks are intensifying their anti-crypto stance by blocking or limiting customer transfers to cryptocurrency exchanges, citing fraud and consumer protection concerns, despite the UK government's ongoing process to create a comprehensive regulatory framework for digital assets. A recent survey found that 40% of transfers to exchanges are blocked or delayed.

Bank Policies and Industry Reaction

Major banks such as HSBC, Barclays, and NatWest impose limits on how much customers can transfer, while others like Chase UK, Metro Bank, TSB, and Starling Bank have implemented full bans on transfers to crypto exchanges. Banks justify these actions by stating they have a duty to protect their customers from high-risk assets and potential financial crime, such as money laundering and scams.

A report by the UK Cryptoasset Business Council (UKCBC), which lobbied the government on behalf of ten of the country's largest exchanges, found that eight of the firms experienced an increase in customers facing blocked transfers in 2025. The UKCBC argues that these blanket restrictions are an obstacle to the growth of the local crypto industry and that banks should take a case-by-case approach for platforms registered with the Financial Conduct Authority (FCA). One exchange reported nearly $1.4 billion in declined transactions in 2025 due to bank rejections.

Regulatory Process

The UK government is proceeding with plans to make the UK a global hub for crypto technology, with new legislation expected to bring cryptoassets into the full regulatory perimeter of the Financial Services and Markets Act (FSMA). Key developments include:

Legislation: Draft legislation was published in late 2025, with the new regulatory regime expected to come into full force by October 2027.

FCA Role: The FCA is developing detailed rules for the new regime, covering stablecoins, custody, and prudential requirements. Firms promoting cryptoassets to UK consumers must already be authorized by the FCA or have their promotions approved.

Prudential Rules: By 2026, the Bank of England is expected to introduce stricter rules on banks holding crypto assets, potentially limiting exposure to less than 1% of their capital, which could further influence their cautious approach.

The conflict highlights a disconnect between the government's ambition to foster crypto innovation and the traditional banking sector's risk-averse stance driven by consumer protection and financial crime concerns.

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