A survey of cryptoasset firms conducted by CryptoUK, the self-regulatory trade body for the sector in the UK, has found that almost three quarters of crypto businesses are forced to bank overseas, largely due to the difficulties of opening a bank account in the UK.
Despite the Government’s desire to see the UK remain the global hub of the FinTech sector post Brexit, 73% of surveyed crypto firms active in the UK said they had opened a bank account in another jurisdiction and almost 70% said they had moved or considered moving operations out of the UK due to the inability to open a UK bank account
The UK risks facing a drain in innovation and tech talent if banks refuse to consider opening accounts for companies operating in the cryptoassets sector. Three quarters (75%) of firms responded that access to banking services is essential to growing operations in the UK.
The majority of firms (55%) surveyed had applied for a bank account in the UK and been rejected. In half of cases (50%), no reason or justification for this was given.
CryptoUK is calling on the Government and regulators to look to jurisdictions such as France, which has recently introduced legislation that supports crypto firms in getting access to banking services if they opt in to be regulated.
In addition, under the UK’s existing Payment Service Regulations there is a requirement for providers to give a reason for declining services to firms, yet this is not currently being enforced.
CryptoUK’s members are required to sign up to a Code of Conduct which sets out strict anti-money laundering, counter terrorist financing (CTF) and Know Your Customer (KYC) procedures and has responded positively to the Treasury’s recent consultation on transposing into UK law the latest anti-money laundering legislation agreed at an EU level, known as the 5th Money Laundering Directive (5MLD).
Iqbal V. Gandham, Chair of CryptoUK, said: “Many in the crypto sector, including CryptoUK’s members, want to call the UK home, invest in innovation and grow their operations here. 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.
“We have been working with Government, Treasury and the FCA since we launched in 2018 to put forward plans for appropriate regulation. The crypto sector needs support from both regulators and the banking industry if we are to thrive in the UK.”
SUMMARY OF FINDINGS
- 55% of respondents have a UK bank account
- Among those firms which were able to successfully open a bank account, for 9.1% this process took more than 18 months
- 55% of respondents have been rejected by a bank when attempting to open a UK bank account
- 50% of companies rejected did not receive a reason for rejection
- 35% of respondents had approached more than 5 banks regarding opening a UK bank account
- 68% of respondents had moved or considered moving operations out of the UK due to the inability to open a UK bank account
- 73% of respondents have a foreign bank account
- 75% of respondents believe that access to UK banking services is essential to growing their operations in the UK