UK lawmakers are stepping up scrutiny of banks’ treatment of cryptocurrency companies as the country prepares to introduce a broader regulatory framework for digital assets.
The Crypto and Digital Assets All-Party Parliamentary Group (APPG) has written to the chief executives of major UK banks and banking service providers, asking them to explain how they treat crypto businesses and whether their policies will change once the Financial Conduct Authority’s (FCA) new regime takes effect. The lawmakers warned that limited access to banking services could become one of the biggest obstacles to the growth of the UK crypto industry.
Key Takeaways
- UK lawmakers are questioning major banks over restrictions placed on crypto businesses and whether those policies will change under the incoming FCA regulatory regime.
- Banking access is emerging as a major barrier to crypto growth, with businesses reporting difficulties opening accounts, processing payments and maintaining relationships with banks.
- The FCA’s new crypto regime could change the situation, as lawmakers want banks to distinguish between legitimate, authorized crypto firms and higher-risk businesses rather than restricting companies based solely on their sector.
- The APPG inquiry could shape future policy, with evidence being collected until Aug. 31 to determine whether additional measures are needed to ensure regulated crypto firms can access essential banking services.
Lawmakers Question Banks Over Crypto Restrictions
The letter was sent on Aug. 11 by APPG co chairs Gurinder Singh Josan CBE MP and Lord Vaizey of Didcot. It follows repeated reports from crypto businesses struggling to open or maintain UK bank accounts and facing restrictions on payments involving digital asset platforms.
The lawmakers asked banks six main questions covering whether they currently provide services to crypto firms, what restrictions they impose on crypto related transactions, and which regulatory, legal, commercial and risk factors influence their decisions. They also asked whether banks expect their policies to change once crypto businesses become authorized under the UK’s incoming regulatory framework.
The APPG acknowledged that banks have obligations to prevent financial crime and protect consumers. However, lawmakers said banking decisions should increasingly consider the individual risk profile of a company rather than simply its connection to the crypto sector.
Banks Cite Fraud and Consumer Risks
Several UK banks have introduced restrictions on cryptocurrency transactions in recent years. The restrictions range from transfer limits to outright bans on payments involving some crypto exchanges. Banks have pointed to concerns over cryptocurrency related scams, fraud and the potential for customers to lose significant amounts of money because of digital asset volatility.
Research cited by the APPG inquiry also suggests that banking restrictions are having a broader impact on crypto businesses. The UK Cryptoasset Business Council previously reported significant problems with transfers between bank accounts and crypto exchanges.
For crypto companies, limited banking access can create practical difficulties beyond trading. Businesses may need bank accounts to pay employees, manage operating expenses, process customer payments and maintain other basic financial services. Lord Vaizey described the difficulty as an unnecessary source of friction for businesses operating in the UK.
FCA Regime Raises Questions About De-Banking
The timing of the parliamentary intervention is significant because the UK is moving toward a more comprehensive regulatory framework for cryptoassets. The FCA finalized its broader crypto rules in June. Under the new framework, firms conducting regulated crypto activities will need authorization, with applications expected to open on Sept. 30, 2026. The new regime is expected to become mandatory in October 2027.
The APPG is therefore questioning whether banks should continue applying broad restrictions to crypto businesses once those companies are formally authorized and subject to regulatory supervision.
UK Economic Secretary to the Treasury Lucy Rigby has previously indicated that the government would not expect FCA-authorized crypto firms to face banking restrictions simply because they operate in the digital asset sector. The distinction could become increasingly important as the UK attempts to attract legitimate crypto businesses while imposing stronger compliance requirements on the industry.
Parliamentary Inquiry Continues
The letter forms part of a broader APPG inquiry into access to banking services for crypto and digital asset businesses, which began on July 21. The inquiry is examining the scale of banking restrictions, their effect on investment and industry growth, and whether additional government or regulatory measures are necessary. The investigation covers a wide range of businesses, including crypto exchanges, custodians, payment companies, wallet providers, tokenization businesses and stablecoin issuers.
Written evidence is being accepted until Aug. 31, after which the APPG is expected to use the submissions to develop recommendations for the UK government. The inquiry could provide lawmakers with a clearer picture of whether banking restrictions are primarily driven by legitimate financial crime concerns or whether some businesses are being excluded because of their association with the crypto sector.
What This Means for the UK Crypto Industry
The banking issue could become increasingly important as the FCA regime develops. Regulation is intended to give legitimate crypto businesses clearer rules and greater credibility, but that benefit could be limited if regulated firms still struggle to access basic banking services. For banks, the challenge will be balancing financial crime and consumer protection responsibilities with fair access for businesses that meet the new regulatory requirements.
Conclusion
The UK’s crypto sector is approaching a critical transition. The incoming FCA regime could give legitimate digital asset companies greater regulatory certainty, but lawmakers are warning that regulation alone will not make the country competitive if banks continue to restrict access based primarily on sector risk. The APPG’s inquiry and the responses from major banks could influence whether authorized crypto firms receive broader access to traditional financial services. If the UK wants to establish itself as a major digital asset hub, resolving the gap between crypto regulation and banking access may be just as important as the regulatory framework itself.
