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To cope with the changing regulatory environment surrounding the cryptocurrency industry in the UK, banks HSBC Holdings Plc and Nationwide Building Society have taken steps to limit retail customers’ access to cryptocurrencies. These measures highlight the growing concern and uncertainty that UK banks are facing regarding the use and trading of cryptocurrencies.
So, according to Bloomberg, the bank said: “This measure is due to the possible risk to customers.”
For its part, Nationwide recently released more details about its decision to restrict access to cryptocurrencies. According to it, credit cards can no longer be used to make purchases in cryptocurrencies, and daily limits for debit card purchases are set at £5,000 ($6,000).
In addition, the £100 ($120) daily limit for a certain account type, suitable for young people under the age of 23, has been reduced.
The bank’s website also states: “These restrictions will apply when we identify payments destined for cryptocurrency platforms.” Moreover, he adds
“These limits apply every time you use your card to make a payment. This includes using a digital wallet such as Apple Pay or Google Wallet.”
In addition, card payments to the leading cryptocurrency platform Binance are limited and will be rejected. This decision comes after “similar steps taken by other vendors.” The bank clarifies that “Even with your express consent in person or by phone, we cannot remove the restriction and allow you to make a payment on Binance.”
However, users can still withdraw the money they have on Binance to their nationwide accounts.
To explain these decisions, two banks pointed the finger at the Financial Conduct Authority (FCA). Indeed, this regulator has issued warnings about the risks associated with buying cryptocurrencies.
Various regulators, including the International Monetary Fund (IMF) and the Financial Action Task Force on Money Laundering (FATF), regularly warn banks against facilitating the purchase of cryptocurrencies. Indeed, according to these organizations, cryptocurrencies may pose risks to the traditional financial system.
The US Federal Reserve (Fed) also said that financial institutions should be wary of “potentially increased liquidity risks” associated with certain funding sources from cryptocurrency-related entities.
Over the past few years, other UK institutions have tightened restrictions on crypto-related businesses. Among them are Banco Santander SA, Lloyds Banking Group Plc and Natwest Group Plc.
Also, while many banks place restrictions on crypto platforms, Binance remains a particularly popular organization when it comes to restrictions.
Meanwhile, earlier this week, cryptocurrency-friendly bank Silvergate announced that it would be unable to file its annual financial report with the SEC on time. In addition, she indicated that she evaluates her ability to stay in business.
So last Thursday, after this announcement, the bank’s shares fell more than 55%.
Silvergate was one of the hardest hit lenders when the FTX platform went down last November.
He suffered a bank run and was forced to sell $5.2 billion worth of debt securities at a loss to cover nearly $8.1 billion in customer withdrawals. As a result, it suffered a loss of $718 million, which would exceed the bank’s total profit since 2013.
In addition, a number of crypto companies that used to do business with a crypto bank are struggling to end their relationship. MicroStrategy and Tether have denied having any significant influence on Silvergate. Similarly, many other crypto companies including Coinbase, Paxos, Galaxy Digital, and Kraken ended their relationship with the bank after the late announcement.
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