Survey reveals UK banking institutions impede 40% of cryptocurrency platform transactions
According to a recent report from the UK Cryptoasset Business Council, nearly every major banking institution in Britain is implementing comprehensive restrictions or outright prohibitions on fund transfers to cryptocurrency platforms, essentially cutting off crypto customers from banking services.
Recent research conducted by the UK Cryptoasset Business Council (UKCBC) has revealed that financial transactions flowing between British banking institutions and cryptocurrency trading platforms are routinely blocked, held up or rejected, despite customers attempting to utilize properly regulated services.
The research study, which carries the title "Locked Out: Debanking the UK's Digital Asset Economy," incorporates input from 10 of Britain's most prominent centralized cryptocurrency exchanges, platforms that together provide services to millions of British consumers and have facilitated the processing of hundreds of billions of pounds worth of financial transactions.
The study's objective is to substitute anecdotal evidence with concrete statistical data regarding the impact of existing banking procedures on the cryptocurrency industry. The UKCBC contends that pervasive banking restrictions represent a significant barrier to sector expansion and are currently eroding the United Kingdom's aspirations to establish itself as a premier global center for digital asset activity.
According to the survey's findings, eight out of every 10 exchanges documented a marked uptick throughout the preceding 12 months in the number of customers facing blocked or restricted fund transfers, with zero exchanges reporting any reduction in such incidents.
How hard is it to move money?
Drawing from the exchanges' transaction data, the UKCBC calculates that approximately 40% of all financial transactions directed toward cryptocurrency exchanges face either complete blocking or significant delays imposed by the banking institutions involved.
In an interview with Cointelegraph, Simon Jennings, executive director of the UKCBC, stated, "We acknowledge that fraud is a legitimate concern and we actively want to work towards a solution." "However, there is a widespread concern within the industry that banks are using compliance posture as a proxy to the hinder growth of the sector."
A prominent cryptocurrency exchange with UK origins documented approximately 1 billion pounds (roughly $1.4 billion) in rejected British transactions throughout the previous year, with these rejections stemming from bank-initiated denials of card-based payments and open-banking transfer methods.
This behavioral pattern extends across a broad spectrum of financial service providers, as the majority of established high-street banking institutions have now implemented stringent limitations or complete prohibitions on both traditional bank transfers and card-based payments directed to cryptocurrency exchanges, while a number of challenger banking institutions permit such payments but enforce restrictive caps or 30-day transaction limits.
Blanket policies and lack of transparency
The UKCBC emphasizes that virtually every major banking institution and payment processing company operating in the UK presently enforces sweeping transaction restrictions or total prohibitions targeting cryptoasset exchange platforms, frequently failing to distinguish between Financial Conduct Authority-registered domestic enterprises and platforms presenting elevated risk profiles.
Qualitative input gathered from cryptocurrency exchanges underscored the presence of inconsistent restrictions "even against FCA-registered firms," restrictions that are motivated by blanket institutional policies instead of evidence-driven risk evaluation methodologies.
Jennings indicated that their interactions with British cryptocurrency exchanges revealed that "payment blocks or limits are applied universally," and that registration with the FCA "does not currently prevent these restrictions."
The research document additionally highlights an almost complete absence of transparency surrounding these banking decisions, with 100% of the exchanges participating in the survey indicating that banking institutions offer no substantive explanations for payment blockages or account limitations, thereby leaving both companies and their customer bases "in the dark."
A cryptocurrency exchange cited within the report indicated that 60% of its customer base expressed frustration at the resulting obstacles, while a different exchange characterized bank-imposed restrictions and prohibitions as "the single biggest problem" associated with expanding or introducing new cryptocurrency-related products within the UK market.
UKCBC recommendations
From the UKCBC's perspective, the issue extends well beyond mere customer inconvenience. The report reaches the conclusion that anti-competitive banking restriction practices are "undermining domestic innovation and driving competition overseas."
The council puts forward recommendations that the government and FCA articulate clearly that blanket prohibition policies are unacceptable, mandate that banking institutions implement more nuanced, risk-based operational frameworks that differentiate between various exchange platforms, and eliminate unnecessary obstacles for enterprises registered with the FCA.
Jennings emphasized that "constructive dialogue" was the essential initial step, although, to date, "banks have not meaningfully engaged and have been unwilling to share data on fraud levels." He further stated, "If the UK is going to lead the global race, this cannot continue."