Despite years of uncertainty, cryptocurrencies and digital assets have found their way into mainstream acceptance. Yet, significant challenges persist.
A study from the UK Cryptoasset Business Council (UKCBC) revealed that 40% of transfers between UK crypto exchanges and bank accounts are often blocked or delayed.
This issue frequently emerges due to financial institutions implementing blanket bans or transaction limits as a protective measure against fraud. However, these problems continue even when customers use platforms licensed by the UK’s Financial Conduct Authority (FCA).
The situation appears to be worsening with crypto adoption on the rise. UKCBC analyzed transactions at ten of the UK’s largest exchanges and found that eight out of those firms reported a measurable increase in blocked or limited transfers last year, while none reported a decrease.
Stymied Innovation
While fraud remains a global concern for financial institutions, crypto advocates argue that broad blocks and limits could hinder innovation and undercut the competitiveness of UK banks. Leveraging the capabilities of digital assets, many leading financial institutions have invested in technologies such as blockchain, tokenization, and stablecoins.
For example, top UK bank Barclays recently acquired a significant stake in U.S.-based stablecoin settlement platform Ubyx, aiming to integrate digital assets with regulatory standards within the financial services industry.
Mirroring Obligations
This investment trend highlights the substantial institutional involvement in the crypto space. In response, many crypto companies have overhauled their compliance standards and fraud defenses to align with those of their banking partners.
As crypto exchanges and fintech companies take on greater roles, the U.S. Federal Reserve has even considered creating dedicated skinny” master accounts that would grant these firms direct access to Federal Reserve services without the need for a bank intermediary.
This growing acceptance of crypto platforms by banks, fintechs, and regulators suggests that imposing broad limits and blocks on crypto companies is counterproductive. At minimum, the UKCBC recommends that UK banks differentiate their policies between licensed and unlicensed crypto companies.
