About 40% of crypto transactions are reportedly blocked or delayed by UK banks, prompting a parliamentary inquiry into banking restrictions impacting crypto firms and their users. Major lenders including HSBC, Nationwide, Natwest, Santander, and Starling are under scrutiny as these barriers may obstruct the UK’s ambitions to become a leading digital asset hub.

The Crypto and Digital Assets All-Party Parliamentary Group (APPG) has initiated a six-week review to investigate whether banks' measures such as account closures, payment blocks, and transfer limits are proportionate responses to fraud risks or excessive hurdles impeding legitimate crypto business operations. The inquiry is co-chaired by Lord Vaizey of Didcot and Labour lawmaker Gurinder Singh Josan and seeks input from industry stakeholders until August 31, ahead of the crypto regulatory regime becoming mandatory in October 2027.

Banking Restrictions Affecting Crypto Industry Growth

Crypto companies have frequently encountered difficulties opening and maintaining bank accounts in the UK. Users also face transaction caps or outright blocks when sending funds to exchanges. According to research by the UK Cryptoasset Business Council in January, 70% of surveyed exchanges linked banking restrictions to hampered investment, hiring, or expansion within the country.

Lawmakers aim to assess the impact of these restrictions on consumer access, competition, investment flows, and innovation within the digital assets sector. Josan and Vaizey emphasized that unrestricted banking services are key for any lawful business and caution that unnecessary barriers risk stifling sector growth and weakening government digital strategies.

Government Response and International Context

The UK’s HM Treasury has recognized concerns around banking constraints on crypto firms. Economic Secretary Lucy Rigby stated in March that companies authorized by the Financial Conduct Authority should not be denied banking services solely because they operate in cryptocurrency. The parliamentary group will also compare UK policies with approaches in the US, Australia, Hong Kong, and the European Union to identify best practices and gaps.

The inquiry’s findings will inform regulatory and industry approaches before the crypto regime’s October 2027 implementation. This review unfolds as the digital asset sector seeks clearer paths to financial services amidst global regulatory shifts.

This material provides information only and does not constitute financial advice.