(Kitco News) -
Banks are stonewalling crypto firms even as Prime Minister Rishi Sunak’s government promotes the UK as an ideal jurisdiction for digital asset companies to start and grow, according to multiple industry sources quoted in a Bloomberg report published Sunday.
“There aren’t many options available – most traditional banks won’t offer banking services to crypto firms,” said Edouard Daunizeau, CEO of SavingBlocks, which offers digital asset portfolios for passive investors. “With the recent string of events it will be even tougher.”
The London-based SavingBlocks has been in business for over a year, but after applying to nine different banks, they still haven’t secured basic banking services. Daunizeau told Bloomberg that seven banks turned him down outright, and the two that were willing to engage with him have spent months issuing demands for “additional documentation, such as describing in detail the processes he uses to screen clients’ transactions.”
“We are seeking licenses in France where we think it will be easier,” Daunizeau said. He declined to identify which banks he approached.
On April 4, 2022, the UK government announced a number of pro-crypto initiatives including plans to mint their own non-fungible token (NFT), regulating stablecoins under the country's existing electronic payments rules, determining the legal status of decentralized autonomous organizations (DAOs), and examining how to tax decentralized finance (DeFi) loans and ‘staking’ as part of a broader effort to engage with and encourage the growth of the crypto industry.
"We want to see the businesses of tomorrow - and the jobs they create - here in the UK, and by regulating effectively, we can give them the confidence they need to think and invest long-term," said Sunak, who was the Chancellor of the Exchequer at the time.
Economic Secretary to the Treasury John Glen said at the time "If crypto-technologies are going to be a big part of the future, then we - the UK - want to be in, and in on the ground floor."
And on Feb. 1, The United Kingdom published their regulatory framework for crypto regulation, outlining the government’s choice of regulator to oversee the sector, as well as detailed direction on stablecoin classification, rules for ICOs, exchanges, custody, and other key regulations for digital assets.
“Our objective is to establish a proportionate, clear regulatory framework which enables firms to innovate at pace, while maintaining financial stability and clear regulatory standards,” wrote Andrew Griffith, Economic Secretary to the Treasury. “This includes a proposal to bring centralised cryptoasset exchanges into financial services regulation for the first time, as well as other core activities like custody and lending.”
The regulatory framework outlined in the report aims to achieve four overarching policy objectives: Encourage growth, innovation, and competition in the UK; enable consumers to make well-informed decisions, with a clear understanding of the risks involved; protect UK financial stability; and protect UK market integrity.
But according to the 12 crypto executives interviewed by Bloomberg, the banking sector is making the first of these policy objectives unattainable, citing “a host of difficulties, ranging from having applications rejected to getting buried in paperwork.” The report claims that crypto firms have been driven to take their complaints directly to the government in recent weeks.
Crypto executives also pressed Griffith on the problem of banking access at a meeting with the Treasury on Mar. 8, according to two people who were present. The report said Griffith told them “he would try to resolve the problem with lenders,” and a Treasury spokesperson said afterwards that the government would continue to engage with stakeholders on “emerging issues,” without commenting on specifics of the meeting.
“When crypto started, the purists were saying crypto will bring down the banks,” Simon Jennings, executive director at the UK CryptoAsset Business Council, told Bloomberg. “Ironically, it’s the banks that could bring down crypto.”
