Regulator Warnings Prompt HSBC and Nationwide Banks to Limit Crypto Transactions
In response to the evolving legal and regulatory landscape surrounding the crypto industry, HSBC Holdings Plc and Nationwide Building Society have taken measures to limit retail customers’ access to cryptoassets. This latest development highlights the growing concerns and uncertainties faced by UK banks regarding the use and trade of cryptocurrencies.
A Bloomberg report quoted the bank as saying, “This is because of the possible risk to customers.”
Nationwide has recently released more details regarding their decision to limit access to cryptoassets. As per their announcement, credit cards can no longer be used to make crypto purchases and daily limits on debit card purchases have been set at £5,000 ($6,000).
Additionally, a reduced daily limit of £100 ($120) has been implemented for a specific account type tailored to young people under the age of 23.
“These will apply where we identify payments to crypto exchanges,” it said, adding:
“These limits apply any time you use your card to make a payment. That includes using a digital wallet, such as Apple Pay or Google Wallet.”
Additionally, card payments to the major crypto exchange Binance have been restricted and will be rejected – which follows “similar action from other providers”, adding that “even with your direct consent in person or by telephone, we can’t remove the restriction and allow you to make a payment to Binance.”
Users can, however, still withdraw the money they have with Binance into their Nationwide accounts.
As to the reason behind these decisions, both banks pointed to the Financial Conduct Authority (FCA), which had issued warnings about the risks that come with buying crypto.
Regulators, including the International Monetary Fund (IMF) and the Financial Action Task Force (FATF), have consistently cautioned banks against facilitating crypto purchases due to the perceived risks that cryptoassets may pose to the traditional financial system.
The US Federal Reserve (Fed) also said financial institutions must be cautious of “potentially heightened liquidity risks” that come with some sources of funding from crypto-related entities.
Other UK institutions have tightened restrictions placed on crypto-related businesses over the past few years, including Banco Santander SA, Lloyds Banking Group Plc, and Natwest Group Plc.
Notably, while many banks have limits related to crypto exchanges, Binance remains a particularly popular entity for placing restrictions on.
Meanwhile, crypto-friendly bank Silvergate announced earlier this week that it would not be able to file its annual financial report to the SEC on time and that it was evaluating its ability to stay in business.
The bank’s shares fell more than 55% on Thursday following the announcement.
Silvergate was among the lenders hit the hardest by the fall of the FTX exchange in November last year.
It suffered a bank run and had to sell $5.2 billion of debt securities at a significant loss to cover around $8.1 billion in user withdrawals. As a result, it incurred a $718 million loss, which reportedly exceeded the bank’s total profits since 2013.
Now, a number of crypto firms that had banked with the crypto bank are rushing for the exits. MicroStrategy and Tether denied having had any meaningful exposure to Silvergate, and multiple other crypto companies, including Coinbase, Paxos, Galaxy Digital, and Kraken, ended their relationships with the bank following the delayed announcement.
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Learn more:
– Silvergate Bank Stock Plunges After Report of DOJ Investigation into Ties with FTX and Alameda
– Boris Johnson’s Brother Quits Binance Unit Advisory Role Amid ‘Finance Transparency Concerns’ and Market Turmoil – Here’s What Happened
– ‘UK Must Move Faster’ on Crypto Regulation
– UK Law Enforcement and Regulators Join Forces to Dismantle Illegal Crypto ATMs
