HSBC Holdings Plc and Nationwide Building Society imposed limits on retail customers’ access to cryptoassets in another episode of UK banks reacting to the recent crypto industry legal and regulatory issues.
HSBC said that, in February, it restricted customers from buying crypto with its credit cards, Bloomberg reported. The report quoted the bank as saying that,
“This is because of the possible risk to customers.”
More information in available on Nationwide’s decision. Credit cards can no longer be used for crypto purchases, and the bank is applying daily limits of £5,000 ($6,000) on debit card purchases, the announcement stated. For an account type designed for young people until the age of 23, the daily limit is now £100 ($120).
“These will apply where we identify payments to crypto exchanges,” it said, adding:
“These limits apply any time you use your card to make a payment. That includes using a digital wallet, such as Apple Pay or Google Wallet.”
Additionally, card payments made to the major crypto exchange Binance have been restricted and will be declined – which follows “similar action from other providers.”
“Even with your direct consent in person or by telephone, we can’t remove the restriction and allow you to make a payment to Binance,” Nationwide said.
Users can, however, still withdraw the money they have with Binance into their Nationwide accounts.
As to the reason behind these decisions, both banks pointed to the Financial Conduct Authority (FCA), which had issued warnings about the risks that come with buying crypto.
And not only this regulator, but the International Monetary Fund (IMF) and the Financial Action Task Force (FATF) as well keep warning banks about allowing crypto purchases, citing what they say are the risks that cryptoassets can pose to the traditional financial system.
The US Federal Reserve (Fed) as well said financial institutions must be cautions of “potential heightened liquidity risks” that come with some sources of funding from crypto-related entities.
Other UK institutions have tightened restrictions placed on crypto-related businesses over the past few years, including Banco Santander SA, Lloyds Banking Group Plc, and Natwest Group Plc.
Notably, while many banks have limits related to crypto exchanges, Binance remains a particularly popular entity for place restrictions on.
Meanwhile, crypto-friendly bank Silvergate announced earlier this week that it would not be able to file its annual financial report to the US Securities and Exchange Commission (SEC) on time and that it was evaluating its ability to stay in business. The bank’s shares fell more than 55% on Thursday following the announcement.
Silvergate was among the lenders hit the hardest by the fall of the FTX exchange in November last year. It suffered a bank run and had to sell $5.2 billion of debt securities at a significant loss to cover around $8.1 billion in user withdrawals. As a result, it incurred a $718 million loss, which reportedly exceeded the bank’s total profits since 2013.
This resulted in a number of crypto firms who had banked with the crypto bank rushing for the exits. MicroStrategy and Tether denied having had any meaningful exposure to Silvergate, and multiple other crypto companies, including Coinbase, Paxos, Galaxy Digital, and Kraken, ended their relationships with the bank following its filing on Wednesday.
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Learn more:
– Silvergate Bank Stock Plunges After Report of DOJ Investigation into Ties with FTX and Alameda
– Boris Johnson’s Brother Quits Binance Unit Advisory Role Amid ‘Finance Transparency Concerns’ and Market Turmoil – Here’s What Happened
– ‘UK Must Move Faster’ on Crypto Regulation
– UK Law Enforcement and Regulators Join Forces to Dismantle Illegal Crypto ATMs
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