The UK’s ambition to become a global cryptocurrency hub is facing a critical challenge as lawmakers investigate whether traditional banks are unfairly restricting access to financial services for digital asset businesses and investors.
The Crypto and Digital Assets All-Party Parliamentary Group (APPG) has opened a parliamentary inquiry into banking practices affecting the crypto sector. The review will examine whether banks are placing unnecessary barriers on crypto firms and customers, including account closures, payment restrictions, and blocked transactions. Lawmakers will also evaluate the broader impact of these measures on innovation, market competition, and the UK’s economic growth.
Industry participants, including banks, payment providers, crypto companies, and other stakeholders, have been invited to submit evidence before Aug. 31. The APPG is expected to publish recommendations after reviewing the responses.
The inquiry follows growing concerns from the crypto industry. According to a survey conducted by the UK Cryptoasset Business Council (UKCBC), many exchanges reported that banks either blocked or delayed a significant share of crypto-related payments. The restrictions have reportedly discouraged businesses from expanding operations, hiring employees, or increasing investment within the UK.
Several leading exchanges, including Coinbase, Kraken, Gemini, OKX, Bitpanda, Luno, Uphold, Wirex, Zumo, and Xapo Bank, participated in the survey. Most respondents said customers experienced more payment disruptions over the past year, while many described the UK’s banking environment as increasingly difficult for regulated crypto businesses.
Rather than applying blanket restrictions to all crypto platforms, the UKCBC argues that banks should adopt a more risk-based approach. The organization recommends that financial institutions evaluate exchanges based on factors such as regulatory compliance, governance standards, and anti-fraud controls instead of treating every platform as equally risky.
Legal experts also believe the current system lacks proportionality. Yuriy Brisov, partner at Digital & Analogue Partners, noted that banks have a legitimate responsibility to combat fraud and money laundering. However, he argued that existing policies often fail to distinguish between licensed, regulated exchanges and unregulated offshore platforms, resulting in broad restrictions that affect compliant businesses alongside higher-risk operators.
The issue may also be influenced by the UK’s reimbursement framework for authorized push payment (APP) fraud. Since October 2024, payment providers have generally been required to compensate eligible fraud victims for losses of up to £85,000 per claim. Critics suggest this policy may encourage banks to block crypto-related transactions altogether rather than conduct individual risk assessments.
The debate arrives at a pivotal moment for the UK crypto industry. The Financial Conduct Authority (FCA) is scheduled to begin accepting authorization applications from crypto firms on Sept. 30, while the government’s Cryptoassets Regulations are expected to come fully into force in October 2027.
Supporters of the industry argue that regulatory approval alone will not be enough if licensed companies continue to face barriers when accessing essential banking services. They contend that for the UK to establish itself as a competitive global digital asset hub, financial institutions must align their banking practices with the country’s evolving regulatory framework, ensuring compliant crypto businesses can participate in the financial system on equal terms.
