Big Financial Services is stifling prime minister Rishi Sunak’s vision of the UK as a global crypto hub, Bloomberg wrote on Sunday.
According to a dozen UK crypto executives interviewed by Bloomberg News, Big Banks are rejecting applications en masse, so much so that cryptocurrency firms have started petitioning Sunak for help.
“Most traditional banks won’t offer banking services to crypto firms,” said Edouard Daunizeau of crypto investment platform SavingBlocks in an interview with the paper. “With the recent string of events it will be even tougher,” he said, alluding to the collapse of crypto-friendly US banks Signature and Silvergate.
Daunizeau said he was seeking licenses for his company in the European Union instead, which has presented a more unified effort to establish cryptocurrency policies under the bloc-wide Markets in Crypto Assets (MiCA) legislation.
Sunak must be alarmed at Big Bank’s belligerence towards crypto companies and potential exodus of UK-based crypto companies, right? Not necessarily.
In the Sunak dictionary, crypto is something of a misappropriation of words. And Britcoin – the so-called pound-pegged stablecoin currently being consulted on – is a clever portmanteau, but it is highly misleading.
Britcoin sits in the basket of digital currencies called CBDCs, i.e. Central Bank Digital Currencies.
While it is true that Britcoin and the dozens of other CBDCs being developed by central banks around the world use blockchain technology similar to bitcoin, the similarities end there.
There is a very good reason why governments are keen to introduce CBDCs- rather than posing a threat to traditional monetary systems in the way cryptocurrencies like bitcoin subjectively could, they significantly enhance the level of control the government has over the monetary supply.
If anything, Britcoin could pose a threat to a currency far more private than crypto could ever hope to be: Cash.
The implications of digitally printed pounds being sent straight to your account from the Treasury should be obvious. Your spending habits could be monitored or even restricted.
Say an individual on benefits is attempting to buy a pack of smokes from the local off-license; Britcoin could effectively block any such transaction.
What about fiscal stimulus? The government could impose a time limit for spending your Britcoins to make sure they get pumped into the economy as and when needed.
Such are the capabilities of the digital ledger book. Is Big Financial Services at odds with this idea? I doubt it.
UK banks turn on crypto companies
Proactive previously reported on restrictive measures placed on the crypto sector by UK banks.
Nationwide Building Society implemented restrictions on its customers' ability to purchase cryptocurrencies in March, with Current Accounts getting a £5,000 daily limit, and FlexOne accounts will only allowing for £100 in daily transfers.
In November 2022, Banco Santander (LSE:BNC) limited payments to crypto exchanges to £1,000 per transaction with a total limit of £3,000 in any rolling 30-day period.
HSBC’s corporate media relations manager Ankit Patel told Coindesk last April that “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from virtual currencies”.
In that same month, NatWest began refusing to serve business customers who accept payment in cryptocurrencies, including bitcoin.