Beginning Oct. 16, Chase customers in the UK will be prohibited from making cryptocurrency payments via their debit card or by an outbound bank transfer.
In an email sent to its UK customers, Chase noted that if payments were found to be crypto-related, they would be declined.
“We’re committed to helping keep our customers’ money safe and secure. We’ve seen an increase in the number of crypto scams targeting UK consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account,” a spokesperson said in the email, which was reviewed by CoinDesk.
“While the UK has progressed towards a pro-crypto stance in moving forward with regulatory standards for the industry, they are still in the early phases of compiling a robust regulatory regime for the industry,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.
“A proper framework is needed, but it’s a fairly new and very fast-moving industry so the regulatory topics vary ranging from issuance or custody to lending or market abuse practices. Without proper disclosures, KYC/AML processes, onchain analysis tools, etc., firms like Chase UK don’t know how to handle it all so they just decided that they don’t want to deal with it right now until regulation is passed.”
The Decline of Crypto-Friendly Banks
With the fall of crypto-friendly U.S. banks, including Silvergate, Signature, and Silicon Valley, many financial institutions have started distancing themselves from the crypto sector altogether. Last October, Citibank locked out Swan Bitcoin, a trading platform, out of its corporate bank account without prior notice.
The Federal Reserve, which has been vocal about crypto’s place in the traditional banking system, is ensuring that any activities revolving crypto are closely monitored. “What is particularly worrisome is the concern that crypto-friendly banks were targeted by the federal government in some way,” James Wester, Director of Cryptocurrency and Co-Head of Payments at Javelin Strategy & Research noted recently.
Lack of regulation has not been limited to the U.S. Across the pond, in the UK, numerous banks have also cut ties with the once booming digital currency industry. Growing concerns over fraud and volatility have kept several UK banks from embracing cryptocurrency.
Earlier this year, NatWest Group banned retail and wealth customers from transferring funds into crypto assets, citing concerns about the volatility of the platform. Similarly, HSBC and Nationwide have also announced blockages of crypto payments. Starling Bank has also ended the purchasing and selling of cryptocurrencies via debit cards or bank transfers.
One thing is for certain, without the banking industry, crypto will have a far more difficult time reaching mainstream acceptance.