However, a new analysis by crypto tax software firm Recap suggests that large banks’ stringent cryptocurrency rules seem to run counter to these goals.
According to Recap’s report , banks’ risk-averse policies have resulted in outright prohibitions on cryptocurrency transactions, which have an effect on both small and large investors.
Recap’s research indicates that 22% of cryptocurrency investors are considering switching banks, while 38% of investors have already done so in response to issues with trading digital assets.
The manner in which banks are operating around crypto in the UK seems to be in juxtaposition to the ideal of the government setting out the country — and especially London.
However, while more traditional banks shun crypto, there are some digital banks and financial apps that are much more welcoming and are already reaping the benefits of being so.
Revolut is the only bank that allows trades through mobile banking and offers consumers instructional materials, making it the most cryptocurrency-friendly bank, according to Recap.
Recap’s findings indicate that banks such as HSBC and Natwest have imposed stringent limitations, permitting a maximum of £2,500–£5,000 in cryptocurrency purchases each month.
In the face of disruption from blockchain technology, legacy institutions appear to be finding it difficult to adjust. The paper states that in order for the UK to become a global leader in cryptocurrency, regulators need to guarantee compliance while establishing fair conditions for investors.
Government and business input are needed to strike the right balance. However, Recap notes that because voluntary participation encounters obstacles, progress depends on regulators stepping in to impose the required changes in banking.
The provider of tax software also emphasizes how limiting crypto regulations and services may make it more difficult for people to file their taxes because of account access problems.
In recent years, banks have embraced a rather risk-averse stance regarding cryptocurrencies. In an effort to lower risk, they are tightening the terms under which they permit users to handle cryptocurrencies, putting limitations on both inbound and outbound transactions.
Following the demise of FTX, a prominent cryptocurrency trading platform, some institutions have implemented additional security measures to safeguard their clientele. Additionally, some have limited card payments to Binance, a different exchange, following a warning from the UK’s Financial Conduct Authority (FCA) that Binance was not permitted to carry out any regulated business within the nation.
According to the report, given that a large number of cryptocurrency exchanges are already subject to FCA regulation and have implemented the necessary modifications, it is not clear why most banks are still so resistant. There are not nearly as many regulations pertaining to gaming.
Although depositing money into a bank gives the bank ownership of the money, some view cryptocurrency as a path to financial independence.
Banks are in the news for reasons other than merely crypto restrictions. Over the past year, a lot of financial institutions have started to tighten up other parts of their policy.
It’s recent news that the FCA is looking for information regarding the number of clients who have had their accounts terminated or denied in relation to their cryptocurrency holdings. Additionally, there is a new law about travel that requires users to provide information about the gathering, confirming, and sharing of crucial data related to the transfers of cryptocurrency assets.
The report claims that the financial independence of cryptocurrency investors will continue to be questioned in light of the numerous new rules that are being implemented. Although the government has revealed its intentions to transform London into a significant hub for cryptocurrency, the actual situation is very different, with investors and organizations involved in the industry encountering several issues with banks.