• HSBC Holdings Plc and Nationwide Building Society are limiting access to cryptoassets due to legal and regulatory concerns.
• Credit cards can no longer be used to make crypto purchases and daily limits on debit card purchases have been set at £5,000 ($6,000).
• The Financial Conduct Authority (FCA) has warned banks about the risks associated with buying cryptocurrencies.
Regulator Warnings Prompt Banks To Limit Crypto Transactions
In response to the evolving legal and regulatory landscape surrounding the crypto industry, HSBC Holdings Plc and Nationwide Building Society have taken measures to limit retail customers’ access to cryptoassets. This latest development highlights the growing concerns and uncertainties faced by UK banks regarding the use and trade of cryptocurrencies.
Details Of Restrictions Implemented By Banks
Nationwide has recently released more details regarding their decision to limit access to cryptoassets. As per their announcement, credit cards can no longer be used to make crypto purchases and daily limits on debit card purchases have been set at £5,000 ($6,000). Additionally, a reduced daily limit of £100 ($120) has been implemented for a specific account type tailored to young people under the age of 23. Card payments to major crypto exchanges such as Binance have also been restricted – even with customer’s direct consent in person or by telephone – these payments cannot be made as they will be rejected.
Risks Associated With Crypto Purchases
Regulators including the International Monetary Fund (IMF) and the Financial Action Task Force (FATF), have consistently cautioned banks against facilitating crypto purchases due to the perceived risks that cryptoassets may pose to the traditional financial system. The US Federal Reserve (Fed) also said financial institutions must be cautious of “potentially heightened liquidity risks” that come with some sources of funding from crypto-related entities.
Restrictions Imposed By Other UK Institutions
Other UK institutions have tightened restrictions placed on crypto-related businesses over the past few years, including Banco Santander SA, Lloyds Banking Group Plc, and Natwest Group Plc. Notably, while many banks have limits related to crypto exchanges, Binance remains unrestricted when it comes withdrawals into bank accounts.
This latest development shows how concerned UK banks are about cryptocurrencies given its volatile nature and perceived riskiness compared with traditional assets such as stocks or bonds. Despite this uncertainty however there is still a demand for cryptocurrency trading services in spite of these limitations imposed by some financial institutions.