Starling, a UK-based digital bank, is the latest financial institution to ban cryptocurrency-related activities and transfers for its cardholders.
Starling customers will no longer be able to buy cryptocurrencies such as Bitcoin (BTC) or receive transfers from cryptocurrency exchanges or merchants.
The online bank announced the news in a statement to clients as well as on Twitter, citing the perceived high risks of trading cryptocurrencies.
Hi there We always review our position in relation to financial crime. We consider crypto activity to be high risk. We’ve taken the decision to prevent all card payments to crypto merchants and to implement further restrictions on outgoing and incoming transfers.
— Starling Bank (@StarlingBank) November 22, 2022
Hello. We always review our position in relation to financial crimes. We consider crypto activity to be high risk. We have made the decision to prevent all card payments to cryptocurrency merchants and implement more restrictions on outgoing and incoming transfers.
The bank also described cryptocurrencies as “high risk and heavily used for criminal purposes.”
A Starling spokesperson told Cointelegraph that the bank has had restrictions to “various degrees” on cryptocurrency-related transactions for some time. “We have recently tightened the restrictions on incoming and outgoing transactions by card and bank transfer”declared the representative, adding:
“The innovative technology and thinking behind cryptocurrencies have great potential advantages, however at this time they are high risk and heavily used for criminal purposes and as such we no longer support them.”
The bank’s moves come amid an ongoing industry scandal involving FTX, one of the world’s largest cryptocurrency exchanges that allegedly misappropriated user funds with its sister company Alameda. According to FTX’s bankruptcy filing, the company owes more than $3 billion to its 50 largest creditors, while the total number of creditors reportedly exceeds 1 million investors.
Some members of the cryptocurrency community believe that some restrictions on cryptocurrency activity by banks seem reasonable, but a blanket ban is not the best solution.
“While it is understandable to block individual transactions that banks believe to be outright fraud, banning legitimate transactions that involve an entire industry is unacceptable.”, plot SovrynBTC in a tweet on Thursday. The cryptocurrency enthusiast also wondered why banks don’t care about many other types of risky transactions from their customers, including stock trading or gambling.
4:
Banks do not meddle in any other “high risk” activities – they’ll happily let you purchase tobacco, alcohol, or prescription drugs. Or let you trade stocks or gamble.
Where’s the logic?
—Sovryn | DeFi for Bitcoin (@SovrynBTC) November 24, 2022
Banks do not meddle in any other “high risk” activities; they will gladly allow you to purchase tobacco, alcohol or prescription drugs. Or allow you to trade stocks or bet.
Where is the logic?
The latest restrictions are not the first time Starling has cracked down on cryptocurrency-related activity. The bank briefly halted payments to cryptocurrency exchanges in May 2021 over similar concerns, citing “high levels of suspected financial crime with payments to some cryptocurrency exchanges.”. Starling subsequently resumed cryptocurrency exchange operations around a month later.
The block comes a few weeks after Santander UK limited customer deposits to cryptocurrency exchanges to £1,000 ($1,196) per transaction, and an overall limit of £3,000 ($3,588) a month.
Other UK banks have completely banned cryptocurrency-related transactions. TSB bank banned its 5.4 million customers from buying Bitcoin in June last year. Other big lenders, such as Lloyds, NatWest and Virgin, reportedly banned credit card purchases of cryptocurrency in 2018.
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