HSBC and Nationwide are the latest banks to limit customers' crypto purchases
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(Kitco News) - The relationship between the banking and crypto communities continues to deteriorate as two leading banks in the U.K., HSBC Holdings and Nationwide Building Society, have announced new limitations on the purchase of cryptocurrencies by their customers.
Bloomberg was the first to report on the story on Thursday, saying the move to restrict certain crypto purchases comes in response to warnings by U.K. regulators and the struggles that the industry has experienced over the past 18 months.
Nationwide posted an update to customers regarding the new limits. “We’ve set some limits on buying cryptocurrency with your card,” they wrote. “These will apply where we identify payments to crypto exchanges.”
For adults with up-to-date accounts, there is now a daily limit of 5,000 British pounds ($5,987) on debit-card purchases of crypto assets, and credit cards can no longer be used for crypto transactions. These limits apply any time a customer uses their card to make a payment and it includes the use of digital wallets like Apple Pay or Google Wallet.
Account types affected by this change include FlexStudent, FlexGraduate, FlexBasic, FlexAccount, FlexDirect and FlexPlus. Those with a FlexOne account will only be able to spend £100 ($120) per day for crypto purchases.
Any attempt to spend more than this amount on cryptocurrency on any given day will result in a declined transaction, the bank said. For joint accounts, the daily limits apply to each card, and for those with multiple accounts, the limit will apply to each account.
Last month, HSBC sent an email to customers informing them that they will no longer be able to purchase crypto with their credit card, citing “the possible risk to customers.”
“From 23 February 2023, we’ll no longer allow cryptocurrency purchases using our credit cards,” HSBC said in an email to customers. “This is because of the possible risk to you. The Financial Conduct Authority has warned against investing in crypto assets, as they’re considered very high risk, speculative investments.”
Nationwide and HSBC have joined a growing list of banking institutions in the U.K. that have placed restrictions on engagement with crypto services, including Santander, Natwest Group and Lloyds Banking Group.
Binance, the top crypto exchange globally, is the primary target for many of the restrictions as it currently dominates the crypto trading landscape and has a presence in more than 140 countries. In August 2021, HSBC banned credit card payments to Binance, citing concerns about the regulatory status of the exchange.
|U.K. Parliament looks to increase its regulation of foreign crypto entities in the wake of the FTX collapse|
These actions from U.K.-based banking institutions follow the February release of a proposed regulatory framework for dealing with cryptocurrencies in Britain. The regulatory framework outlined in the report aims to achieve four overarching policy objectives: Encourage growth, innovation, and competition in the U.K.; enable consumers to make well-informed decisions, with a clear understanding of the risks involved; protect U.K. financial stability; and protect U.K. market integrity.
February also saw the Financial Conduct Authority (FCA) announce a crackdown on illegal crypto automated teller machines (ATMs) operating in the country, taking down multiple unregistered ATMs and eliminating another access point for purchasing crypto, and a proposal by the FCA which could see crypto executives sentenced to two years in prison if they violate rules related to the promotion of cryptocurrency products.
Ever since the collapse of FTX, global regulators have increased their warnings about and enforcement actions against the crypto industry in a bid to protect investors. This includes actions by the Financial Stability Board, the International Monetary Fund and the Financial Action Task Force, which have all repeatedly cautioned banks about the risks that cryptoassets pose to the traditional financial system.