British banks are forcing many companies that handle cryptocurrencies to open accounts in Gibraltar, Poland and Bulgaria and prompting some to question the UK’s ambitions to be a global hub for the fast-growing fintech sector, the Financial Times reported.
“Nobody will give us a bank account in the UK,” said James Godfrey, head of capital markets at BlockEx. The platform for trading digital assets including cryptocurrencies had to rely on a Bulgarian lender to keep trading after the Metro Bank recently shut its UK account.
The Financial Conduct Authority is worried that banks’ unwillingness to open accounts for some fintechs is hurting competition after it hampered several start-ups entering its sandbox to test their business models under its supervision.
“We are concerned that denying certain customers bank accounts on a wholesale basis causes significant barriers to entry and could lead to poor competition in certain markets,” the regulator said.
Iqbal Gandham, UK head of eToro, a social trading firm that has handled more than $1bn of cryptocurrency trades for clients since adding the asset class to its platform this year, said: “The moment you mention crypto to a bank, it’s like you are a drug dealer.”
Traditional lenders fear the rising sector is full of criminals and fraudsters Banks are keeping their distance, worried by the fact that cryptocurrencies are commonly used by criminals to trade illicit goods on the “dark web.”