- The UK government must take decisive action to ensure banks are willing to work with crypto firms, amidst increasing instances of financial institutions imposing bans on crypto-related transactions.
- Su Carpenter, director of operations at CryptoUK, criticizes banks for their overly cautious approach to cryptoassets and urges for governmental intervention to bridge the gap between traditional finance and the burgeoning crypto industry.
In the wake of several banks taking a stand against crypto transactions, CryptoUK, the trade association for the digital currency industry in the United Kingdom, is calling on the government to step in and facilitate a cooperative relationship between traditional financial institutions and crypto firms.
Su Carpenter, the director of operations at CryptoUK, expressed her concerns over the risk-averse stance of banks towards cryptoassets. Just last month, Chase UK declared a halt to transactions involving cryptoassets, citing concerns related to the potential misuse of digital currencies in illicit activities.
“While we understand that there are concerns regarding the fraudulent use of crypto, it’s vital to acknowledge that fraudulent activities are not exclusive to this sector,”
Carpenter pointed out.
Navigating the Risk Landscape: Banks have been quick to single out crypto as a high-risk area, with some even going as far as imposing outright bans on transactions involving digital currencies. Challenger bank Starling is one such example, having decided last year to stop supporting crypto transactions after revisiting its financial crime prevention policies.
Carpenter argues that this generalized apprehension towards crypto is unfounded and that the technology itself should not be blamed for instances of fraud. She emphasizes the necessity for banks to adopt comprehensive financial safeguards that would allow consumers the freedom to engage with crypto while mitigating potential risks.
“Just labeling all fraudulent activities involving crypto as ‘crypto fraud’ is an oversimplification and an unfair characterization of the technology,”
Government’s Role in Fostering Collaboration: CryptoUK firmly believes that in cases where banks are completely shunning crypto, it is incumbent upon the government to intervene and encourage dialogue and cooperation. Carpenter insists that the government has a crucial role to play in bringing together both sectors to find viable solutions for de-risking crypto transactions.
“The banks’ arguments about the risks associated with crypto need to be scrutinized for accuracy,”
Despite some positive steps taken by the UK government towards engaging with the crypto industry, Carpenter notes that the country is far from becoming the
“global cryptoasset hub”
envisioned by Chancellor Rishi Sunak. She acknowledges the efforts made in supporting crypto but expresses dissatisfaction with the actions of the Financial Conduct Authority (FCA), particularly regarding the recently enforced crypto promotion rules.
While the FCA argues that these new rules are in place to protect consumers from high-risk investments and fraud, CryptoUK contends that they add unnecessary complications to the customer onboarding process, potentially hindering consumer protection. Carpenter concludes by highlighting the challenges faced by the FCA, given their responsibility to oversee the crypto sector without clear guidelines and within a constrained timeframe. The recent decision by Binance, the world’s largest cryptocurrency exchange, to stop accepting new UK customers is a testament to the growing tension between crypto firms and regulatory bodies.