United Kingdom banks hate crypto, and that's bad news for everyone

In 2018, the United Kingdoms Financial Conduct Authority (FCA) wrote to the heads of the countrys biggest high street banks to emphasize the importance of due diligence when dealing with crypto businesses. That seems to have led to widespread high-risk ratings and bans on crypto-related banking, impacting both crypto businesses hoping to operate in the U.K. and investors alike.

Banks are, understandably and responsibly, concerned with scams, but the current situation creates uncertainty. Crypto investors need to be able to move their money around as they like, and crypto businesses need access to payment rails for a variety of other reasons, such as paying staff and suppliers.

A catch-22 that harms market competition

By barring crypto businesses from accessing mainstream banking, organizations are forced to use payment service providers (PSPs), which are rated higher risk by banks because theyre also used by the gambling industry. Theres a lack of nuance in this process, with banks tending to blanket block transactions through PSPs.