The UK has been trying to become an international haven for digital asset businesses. However, it has faced stiff opposition from its traditional banking industry. In a rare act of direct intervention, the UK government recently publicly called upon the banks to stop using their ability to block legitimate cryptocurrency businesses from having bank accounts. It warned that a general ban on cryptocurrency businesses and the debanking of them will obstruct the country’s post-Brexit financial strategy.
HM Treasury said this week that it expects banks to treat crypto firms fairly, stating that companies authorized by the Financial Conduct Authority (FCA) should not be subject to “account or transaction restrictions” simply because of the sector they operate in. The statement comes in response to a damning new industry report alleging that British banks are actively blocking millions of customers from accessing perfectly legal, regulated platforms.
The Banking Blockade
Despite the government’s rhetoric about innovation, the on-the-ground reality for crypto firms in London is grim. A new report by the UK Cryptoasset Business Council (UKCBC), titled Locked Out, paints a picture of a hostile banking environment that is getting worse, not better.
Based on a survey of ten major cryptocurrency exchanges operating legally in the UK, the report found that banks are blocking or delaying nearly 40% of all transactions destined for digital asset platforms. For one unnamed exchange, this friction reportedly resulted in £1 billion ($1.2 billion) in declined transactions over a single year.
The study singled out several high-street and challenger banks—including Virgin Money, TSB, and Chase UK—for imposing what effective amounts to blanket bans on transfers to crypto exchanges. Even digital-first banks like Monzo and Revolut were noted for imposing significant friction, such as 30-day transfer limits.
“Hostile” Territory
The disconnect between political ambition and corporate policy is stark. Seven out of the ten exchanges surveyed described the UK banking environment as having become “more hostile” over the last year. This hostility typically manifests as opaque account freezes, declined card payments, and a refusal to engage in dialogue.
“This isn’t good for consumers, and it undermines the government’s ambition to make Britain a hub for digital finance,” said Tom Duff Gordon, Vice President of International Policy at Coinbase.
Gordon argues that banks are failing to distinguish between high-risk, unregulated entities and FCA-registered firms that have already passed rigorous anti-money laundering (AML) checks. “We support strong regulation, but people who’ve completed all the required checks should be able to access legitimate, regulated services without arbitrary barriers,” he added.
The Regulatory Gap
Due to the dissatisfaction with the UK’s regulatory system, banks remain cautious about crypto’s future. The complete framework has not been put into effect yet, and therefore banks have chosen to avoid any involvement in the crypto market until the complete rulebook is rolled out. Recent comments from the UK Treasury indicate that officials no longer believe banks should remain in their current state, and instead, they should begin developing risk models to adapt to the forthcoming regulations.
A Risk of Exodus?
The UKCBC report warns of tangible economic consequences if the blockade continues. It found that 70% of the surveyed exchanges have reduced their appetite to invest, hire, or scale operations within the UK due to banking difficulties.
For a government that has staked significant political capital on becoming a “web3 superpower,” the prospect of major firms pivoting to more banking-friendly jurisdictions like the EU (under MiCA) or the UAE is a serious concern. As the Treasury tries to bridge the gap, the message to the City of London is clear: you cannot build a digital future if you keep the doors locked.
