Challenges Faced by Cryptocurrency Investors in the UK
A significant number of cryptocurrency investors in the United Kingdom are facing challenges in funding their trading accounts due to stringent banking regulations and practices. A recent survey by IG Group, which included responses from 500 cryptocurrency investors and a broader cohort of 2,000 adults, revealed that 40% of crypto investors have encountered situations where their banks either delayed or completely blocked payments intended for crypto services.
Public Sentiment and Banking Interventions
In reaction to these hurdles, 29% of those affected filed complaints with their banks, while 35% switched to different banking institutions to circumvent these issues.
The survey also highlighted public sentiment regarding banking interventions in cryptocurrency transactions. Among the general population sampled, 42% expressed opposition to banks taking such actions, while 33% supported them. Michael Healy, managing director at IG Group UK, criticized the banking sector for creating barriers that effectively exclude many individuals from participating in cryptocurrency, characterizing this behavior as potentially harmful to consumers and detrimental to competition. He stated:
“We’re in a damaging position where millions of people are effectively being locked out of crypto just because of who they bank with.”
Legal and Regulatory Landscape
Despite the legality of cryptocurrency trading in the UK, securing funding for investments remains a notable obstacle. Crypto businesses must register as virtual asset service providers with the Financial Conduct Authority (FCA), and only those authorized by the FCA can facilitate on- and off-ramps for converting fiat currency to digital assets in British pounds. Several prominent banks, including NatWest and Chase UK, have been particularly stringent by actively blocking or limiting transfers to crypto exchanges under the pretext of fraud prevention.
Moreover, the FCA has barred retail investors from using borrowed funds, such as credit cards, to acquire cryptocurrencies, further limiting the financial avenues available for average investors.
Future of Cryptocurrency in the UK
The challenges faced by UK crypto investors come amidst increasing scrutiny of the country’s overall stance towards digital currencies. George Osborne, the former Chancellor of the Exchequer and now an adviser at Coinbase, recently commented on the UK’s risk of lagging behind in the international cryptocurrency landscape. He noted in a Financial Times op-ed that the UK must not neglect this emerging market, citing concerns about the country’s position in global finance as it grapples with the growing significance of digital currencies.
Osborne pointed out the stagnation in the development of stablecoins, a market valued at $288 billion and predominantly controlled by the US dollar, with British pound-denominated options virtually absent apart from a meager $616,000 in circulation. However, there has been some positive movement — the FCA announced on October 8 that it would resume allowing retail trading of crypto exchange-traded notes (ETNs), indicating a possible maturation of the digital asset environment after years of tumultuous shifts and perceived inadequacies in legitimate investment opportunities.
