Debanking Still An Issue? UK Banks Reject or Delay 40% of Payments to Crypto Platforms

• UK banks currently block or delay approximately 40% of all payments headed for cryptocurrency exchanges.
• Around 70% of crypto firms say that banking restrictions are reducing their willingness to invest and scale within the United Kingdom.
• The UK Cryptoasset Business Council is demanding that the FCA enforce a risk-based approach to end this.

The dream of the United Kingdom becoming a hub for crypto is now hitting a major wall. 

A new industry report has just shown a trend where trad-fiinstitutions are cutting off funding to the crypto sector. 

This friction is also affecting about 40% of all payments heading toward crypto exchanges, and has become so severe that 80% of crypto firms say that their customers are complaining.

Are UK Banks Currently Blocking Crypto Transfers

According to the UKCBC’s  “Locked Out” report, the UK’s banking sector is becoming more and more hostile toward the digital economy. 

The survey covered ten major centralised exchanges, including household names like Coinbase, Kraken and OKX, which serve millions of people. 

Yet, 70% of them described the UK banking environment as more hostile now than it was just twelve months ago. The nation even scored a 7.9 out of 10 for difficulty in accessing banking services.

This problem is also not even across all banks, because some high-street names have become harsher than others.

Names like Virgin Money, Metro Bank, TSB and Chase UK have moved toward outright blocks, and even reject both debit card payments and bank transfers to exchanges. 

Other giants like Barclays and HSBC UK allow some movement but have added strict caps. Because of this, users might find themselves limited to £2,500 per transfer or £10,000 over a rolling 30-day period. 

This even reportedly happens when the user is trying to send money to a firm that follows all UK regulations.

The Real Cost of The Ongoing Debanking

One of the most frustrating parts for both users and companies is the lack of transparency. 

All the exchanges surveyed noted that banks rarely provide a clear reason for why they blocked the payment and when a transfer fails, the customer is left in the dark. This lack of communication creates a poor experience for the end user and damages the reputation of the crypto firm. 

Roughly 60% of customers showed anger at the friction and even blamed the exchange itself for what is actually happening from the bank.

Now because this is blocking a large amount of crypto from hitting the market, many firms are looking elsewhere. Some exchanges have also stated that they are looking into other markets because the UK is simply too difficult. 

Legal Clashes in the Banking Sector

The UKCBC argues that these blanket bans might actually be breaking existing laws. 

Current laws like the Payment Services Regulations from 2017 require banks to assess risks on a case-by-case basis. 

Thus, by applying a single rule to an entire industry, banks are ignoring the specific safety measures that regulated exchanges have put in place. This “debanking” trend also goes against the FCA’s Consumer Duty mandate, which requires banks to act in a way that avoids harm to their customers.

There is also a competition issue. If banks can decide which industries are allowed to grow by controlling the flow of money, then they hold a dangerous level of power.