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According to sources, cryptocurrency firms are struggling to access banks and financial services in the United Kingdom. The number of banks that are still working with cryptocurrency companies is dwindling. Additionally crypto-supporting banks are looking for more documentation. They are requesting data about cryptocurrency transactions and client activity from the crypto firms.
According to reports from Bloomberg, UK banks are reluctant to work with cryptocurrency companies which is hitting the firms with challenges stifling operation and innovation in the industry. This is despite the Prime Minister Rishi Sunak’s plans and intentions to make the UK a global cryptocurrency hub.
Chancellor @RishiSunak has asked @RoyalMintUK to create an NFT to be issued by the summer.
This decision shows the the forward-looking approach we are determined to take towards cryptoassets in the UK. pic.twitter.com/cd0tiailBK
— HM Treasury (@hmtreasury) April 4, 2022
The country’s Financial Conduct Authority (FCA) oversees the UK’s cryptocurrency regulation. Cryptocurrencies, such as Bitcoin and Ethereum, have been classified as a financial service, which allows the the watchdog regulating the space to employ anti-money laundering and KYC protocols. In general, legislation infrastructure is a dynamic aspect of cryptocurrency globally. Banks in the country have taken a much more hesitant approach to digital currency firms than Sunak’s plans intend.
The European Union’s crypto approach
According to the Vice President of international policy at Coinbase, this reluctance points to “more acute” reaction to crypto regulation than the EU. Currently, the European Union is looking to establish a framework that prioritises cryptocurrency regulation. This would put cryptocurrency in a positive light rather than a restrictive approach. In October 2022, the EU passed the crypto-friendly Markets in Crypto Assets (MiCA) law. The final vote is set to take place later this month. This will determine whether the law is administered to denied.
According to data from PitchBook, there has been a massive drop in investment in cryptocurrency companies in the first quarter of 2023. Compared to a 31% increase in other European countries, UK investment in crypto firms has declined by a whopping 94% in four months. This lack of funding is a double edged sword with crypto companies struggling to find financial support from banks in the UK. As a result, crypto firms are looking to payment services like BCB Payments and Stripes to continue operating.