Multiple sources have reported that crypto firms in the United Kingdom are having difficulty obtaining banking services, as stated by Bloomberg on Sunday. Local crypto executives have expressed frustration with rejected applications, frozen bank accounts, and overwhelming paperwork.
The situation has worsened with the departure of US-based lenders Silvergate Capital, Signature Bank, and Silicon Valley Banks.
Banking Restrictions Hinder Crypto Firms in the UK
The report states that some companies have lodged complaints with the government due to the severe banking issue in the UK. Despite Prime Minister Rishi Sunak’s efforts to establish the UK as a digital asset hub, local banks are working against this objective.
Edouard Daunizeau, founder of SavingBlocks, a crypto startup offering passive investor portfolios, faced difficulties securing his company’s bank account. Daunizeau was rejected by seven out of the nine lenders he approached for a bank account. The two banks that accepted his application have requested additional documentation, seeking information on how he monitors his clients’ transactions.
Joe David, another executive who co-founded crypto-focused accounting and professional services firm Nephos Group, disclosed that money transfer platform Wise Plc froze his company’s accounts for more than three months from November, citing a breach in terms and conditions.
A spokesperson for Wise stated that the platform does not support companies engaged in crypto and freezes the accounts of clients involved in such activities.
Crypto VC Investment Slumped 94% in Q1
Big banks such as HSBC Holdings and NatWest Group have also restricted the amount of money clients can move into crypto exchanges.
With ongoing banking restrictions, UK lenders are struggling to keep up with the rest of Europe in the crypto industry. Data from venture capital research company PitchBook indicates that VC investment in digital asset companies fell by 94% from 2022 to $55 million in Q1, whereas the rest of Europe saw a 31% increase.
Simon Jennings, executive director at the UK CryptoAsset Business Council advocacy group, commented on the matter: “When crypto started, the purists were saying crypto will bring down the banks. But ironically, it’s the banks that could bring down crypto.”