Crypto industry bosses are stepping up their calls for stronger regulation of the industry.
While large financial institutions prefer JP Morgan, Standard Chartered When city Having made significant recent crypto investments, high street banks have been somewhat indifferent about the virtues of the crypto world.
But now, in the midst of crypto winter, this indifference seems to be turning into antipathy for cryptocurrencies.
Lloyds, Barclays, RBS and neobank Starling It is one of the banks that restricts all crypto investments. This includes blocking credit card transactions and blocking bank transfers on cryptocurrency exchanges.
Cryptocurrency bosses feel under siege as nearly 50% of UK banks are not allowing their customers to trade on cryptocurrency exchanges.
Ban raises multiple questions
Arguably a fresh blow to the crypto industry, the move to block crypto activity also raises other issues, such as questions about customer freedom of choice. Whether banks are guilty of double standards and causing crypto regulation hoopla.
Amanda ShofellCrypto Exchange General Manager and Chief Compliance Officer bitstamp uk, “Until the UK makes significant regulatory progress, the trend will continue for traditional banks to turn their backs on digital assets and crack down on so-called cryptocurrencies.”
Insufficient robustness of security checks
This strike against cryptocurrencies has effectively led banks to say cryptocurrency exchanges do not have robust enough security checks to prevent criminals from using them for fraudulent purposes, but cryptocurrency companies have This is a denied claim.
Cryptocurrency companies say they are being tarred with the same brush as a few rogue actors.
Some of the official statements from banks have been belligerent. For example, Sterling said that cryptocurrencies are “frequently used for criminal purposes.”
But there is no doubt that banks have reason to be concerned. This is a fact acknowledged by the cryptocurrency industry, which, due to lack of regulation, offers no consumer protection against fraud.
In June last year, Financial Conduct Authority forbidden binanceIt is the world’s largest cryptocurrency exchange by trading volume.
Increase in crypto fraud
Meanwhile, a survey of a virtual currency consulting company capital block Cryptocurrency fraud reported to the FCA more than doubled in 2021, with regulators receiving 6,372 fraud reports in 2021, up from 3,143 the year before. FCA received zero complaints in 2017
However, the Capital Block notes that the increase is not surprising given the “relatively early stage of the sector”.
“Until the UK makes significant regulatory progress, the trend will continue for traditional banks to turn their backs on digital assets and crack down on so-called cryptocurrencies.”
Blanket bans are failing on behalf of banks
Cryptocurrency bosses understand banks’ concerns about fraud, but think “blatant measures” like blocking transfers and transactions go too far.
Jamie MacnaughtFounder and CEO, solidy, The FCA-regulated cryptocurrency exchange said he understands banks’ concerns, but imposing such a blanket ban would be a failure of their own control, He said it would haunt banks and result in the loss of customers.
he said:
“Banks are taking a pretty straightforward approach to it and a pretty lazy approach.”
He noted that the transaction between Starling and Solidi has not resulted in any fraudulent activity, but is entirely prohibited.
a more cautious approach
A more prudent alternative for banks to take, McNaught said, is to make extensive use of a 24-hour cool-off period, which allows transactions to be canceled to prevent fraud.
He also believes that in some cases, some customers may need additional restrictions to protect their accounts.
Regarding the impact of the ban on Solidi, McNaught said he has seen an increase in support calls from customers frustrated by the bank’s ban. He said the exchange’s revenue would decline.
On the positive side, I hope Solidi will be able to sign deals and refer customers to crypto-friendly banks like Monzo.
like McNaught Tim Mannall CEO, Capital Sports Media & Capital Blockis against the blunt tool approach taken by banks.
He says that younger generations who want access to cryptocurrencies will ditch Sterling and move to banks like neobanks that are more crypto-friendly. Monzo When Revolute.
He said a more prudent course of action would be to make customers aware of cryptocurrency volatility and limits on one-off transactions instead of a blanket ban.
do not block gambling websites
By way of comparison, he points out that banks do not block customer access to gambling websites. This is a more dangerous financial risk for customers, he says.
he said:
Bank accused of double standards
Cryptocurrency bosses have also suggested that banks could be accused of double standards given their own interests in the space.
Many high street banks have followed U.S. banks in valuing the rich rewards offered by cryptocurrencies as an opportunity for both investment and trading.
If they are so opposed to cryptocurrencies, they say, they should withdraw from interest in cryptocurrencies altogether.
Loud calls for regulation and cooperation
Banks blocked, attracted attention, experts say FTX (one of the largest crypto exchanges in the world) and the industry-wide liquidity crisis has made the need for regulation in the UK more apparent than ever.
Dan Mozurski British MD eTorothe crypto trading platform said:
“The government’s Financial Services and Markets Bill appears to provide some basis for this, but it cannot be done anytime soon.”
Schoffel adds:
Embrace crypto like Europe
“Ultimately, if the UK wants to embrace cryptocurrencies like its European neighbors, it needs to take the necessary regulatory steps to do so.”
Kate Anderson who specialize in fintech in finder, personal finance platform said: I think banks are still looking for ways to adapt cryptocurrencies to their services.
She adds: Clearly there have been crypto winters before. [the crypto industry] I have overcome it. This could be akin to a dot-com crash wheezing out bad guys. ”
Crypto Built on Reinvention
Crypto bosses are keen to negotiate with bank bosses to come up with a win-win solution, but banks seem less enthusiastic and more likely to take a hard line, at least for now.
But cryptocurrency bosses point out that the industry is built on reinvention and has overcome major challenges before. Perhaps in the case of a feud with a bank on the boulevard?
