According to research from CryptoUK, nearly three-quarters of crypto companies in the United Kingdom are forced to open foreign bank accounts.
Nearly three-quarters of U.K.-based crypto businesses have been forced to bank abroad due to the difficulty in opening a bank account locally, according to a survey conducted by CryptoUK, a self-regulatory trade body representing the domestic crypto asset industry.
The organization, which carried out a survey of more than 40 leading companies in the crypto assets sector in May and June 2019, found that banks are frequently refusing to open accounts for crypto businesses, pushing these companies to look for more lenient jurisdictions.
Forced to Bank Overseas
Fifty-five percent of surveyed crypto companies active in the U.K. applied for bank accounts domestically but were rejected. In half of the cases, no reason or justification was given to them.
Seventy-three percent said that they had opened a bank account in another country, citing more than 15 different jurisdictions including the U.S., Switzerland and several EU member states, a spokesperson for CryptoUK told Bitcoin Magazine.
Most of these countries have regulatory regimes for crypto companies and their governments have made proactive efforts to welcome businesses in the sector.
“Many in the crypto sector, including CryptoUK’s members, want to call the U.K. home, invest in innovation and grow their operations here,” Iqbal V. Gandham, chair of CryptoUK, said in a public statement. “But as our survey shows the often-impossible task of opening a bank account is forcing more companies to turn to other jurisdictions, which are often riskier and offer less certainty to companies.”
Though the U.K. government has been looking to maintain the country’s position as a top fintech hub post-Brexit, the U.K. risks facing a drain in innovation and tech talent if banks continue to refuse to do business with crypto companies, CryptoUK said.
The survey found that 69 percent of respondents had either moved or are considering moving out of the U.K. due to difficulties in opening an account, with 75 percent stating that access to banking services is essential for them to grow operations in the U.K.
“Banking services are crucial to enable crypto companies to thrive in the U.K., which was made clear in the responses to CryptoUK’s survey,” the spokesperson said. “Access to banking services in the U.K. would provide greater reassurance for businesses and consumers, allowing the industry to thrive in a secure environment.”
A Call for Favorable Regulation
According to CryptoUK, the difficulties crypto businesses face with the banking industry is largely due to the lack of clarity around crypto assets regulation, leading banks to have a very restrictive approach when it comes to dealing with businesses in the sector.
CryptoUK calls on the government and regulators to look to jurisdictions such as France, which has recently introduced legislation supporting crypto companies in accessing banking services if they opt into being regulated. But most importantly, it urges the public sector to work with the industry “to ensure that innovation in the sector is not hampered.”
“The government has repeatedly declared its desire to make the U.K. the global hub of fintech, and the crypto industry plays a critical role in the sector. The crypto asset industry is currently worth over £300 billion,” the spokesperson said. “The U.K. has the opportunity to become a world leader within the crypto economy, but if we want the brightest minds and the best firms to call the U.K. home, the government must support our emerging sector through appropriate, proportionate and well-designed regulation.
CryptoUK was formed in early 2018 by a group of seven crypto companies, including trading platform eToro and exchange Coinbase. The organization aims to “promote higher standards of conduct” and engages with politicians and regulators “to develop knowledge of the industry” and “help produce an appropriate operating framework for the U.K.’s crypto asset market,” according to press material.