Companies that handle digital currencies are being forced to open bank accounts elsewhere as British banks continue to shun them.
Investor interest in digital currencies has surged this year with bitcoin’s price rising to a record high of $6,200 over the weekend, pushing its market cap to $102.8 billion. Yet, despite this traditional banks remain weary of the market. The Financial Times reports that there are fears it’s riddled with criminals and fraudsters. As a result, cryptocurrency companies are turning to Poland, Bulgaria and Gibraltar to open bank accounts.
James Godfrey, head of capital markets at BlockEx, a platform for trading digital assets including digital currencies, explained that U.K. retail bank Metro Bank shut its U.K. bank account, forcing it to rely on Bulgarian lender.
Nobody will give us a bank account in the U.K.
Godfrey adds that the company is considering relocating to a more welcoming country such as Toronto.
Michael Hudson, chief executive of the bitcoin investment firm Bitstocks, adds:
It is almost an impossibility to get a U.K. bank account. We bank in Gibraltar and Poland — the two jurisdictions that are most stable.
As a consequence of this, concerns are being raised as to whether this will impact the U.K.’s competition in the fintech space. The U.K.’s Financial Conduct Authority (FCA) believes it will place barriers in the way and hamper entry.
However, for many banks in the U.K. it is the fact that digital currencies are being used on the dark web that is raising concerns. With no way of knowing who is exactly behind the transactions taking place they fear they could be used by criminals to trade illegal goods.
One U.K. bank boss said:
You don’t know who is transferring money in and out. If cryptocurrency goes to Iran and we’re involved then I get shut down.
There is no regulatory regime in place yet for digital currencies and the European Banking Authority has yet to update its guidance on the issue. Interestingly, Mario Draghi, the European Central Bank (ECB) chief, recently said that bitcoin and other digital currencies were not mature enough for regulation.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:00 PM