- Banks in the United Kingdom are putting a series of obstacles to crypto companies with which it is difficult for them to open bank accounts.
- These blocks range from lengthy red tape that plunges crypto companies into red tape, to freezing accounts.
- Crypto entrepreneurs now face a dilemma: the government encourages them to expand there, but lenders turn their backs on them.
When Rishi Sunak took office as Prime Minister of the United Kingdom in October last year after the resignation of Liz Trus, the crypto ecosystem thought that with this leader the nation would become a friendly territory with cryptocurrencies, however a series of events show the opposite.
According to an article in BloombergEnglish banks are carrying out a series of practices that make it difficult for crypto companies to open accounts, which range from lengthy red tape that plunges crypto companies into paperwork, to freezing accounts.
Banks seek to protect themselves
Although during the bull run of cryptocurrencies, many banks saw a profitable business affiliated with crypto companies, after all the scandal that happened in 2022 that led to several crypto projects disappearing due to the fall of Terralabs projects ( Luna y Terra) and the bankruptcy of the FTX exchange, financial institutions have decided to take a more conservative stance towards cryptocurrencies.
As Bloomberg points out Although cryptocurrencies are presented as an alternative to traditional finance, today they still need banks to function as a bridge between investors and crypto exchanges. so that they can exchange their fiat money for digital assets and also for the day-to-day tasks of crypto companies, such as paying suppliers and workers. For this reason, the difficulties that banks are putting on cryptocurrency companies allow them to establish themselves in the nation.
But, since when did these blockades start?
History banks vs crypto in UK
Due to the stigma that cryptocurrencies have of being used for money laundering, banks have maintained some caution towards the crypto sector.. Since 2019 there are records of how banks such as Santander limited user transactions to crypto companies, a bank that finally announced in November 2022 that by 2023 it would prohibit all transfers to exchanges.
This was joined by some of the major UK-based banks such as HSBC Holdings Plc and NatWest Group Plc, who they restricted the amount of money their customers can transfer to crypto exchanges.
Crypto companies looking for solutions
Bloomberg interviewed a dozen UK crypto executives who noted the series of difficulties they face in order to open an account in banks, which range from “rejection of applications to being buried in paperwork”.
According to Edouard Daunizeau, from the firm SavingBlocks, there are not many options available for crypto companies, since traditional banks will not offer banking services to crypto companies, this has made firms look for alternatives such as seeking licenses in France, where they think it will be easier.
These blockades have slaved to such a degree that crypto entrepreneurs have resorted directly to the government requesting their help, as Bloomberg quotes, in the United Kingdom, “lCrypto entrepreneurs now face a dilemma: the government encourages them to expand there, but lenders turn their backs on them.”
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