Social Navigation

Regulators warnings urge HSBC and national banks to limit crypto transactions


Regulators warnings urge HSBC and national banks to limit crypto transactions

Source: AdobeStock / BGStock72

HSBC Holdings Plc And National construction company imposed limits on retail customers’ access to crypto-assets in another episode of UK banks reacting to recent legal and regulatory issues in the crypto industry.

HSBC said in February it banned customers from buying crypto with its credit cards, Bloomberg reported. The report quotes the bank saying that,

“It’s because of the possible risk to customers.”

More information is 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 states. For an account type designed for young people up to the age of 23, the daily limit is now £100 ($120).

“These will apply when we identify payments to crypto exchanges,” he said, adding:

“These limits apply each time you use your card to make a payment. This includes using a digital wallet, such as Pay Apple Or google wallet.”

Additionally, card payments made on the leading crypto exchange Binance have been restricted and will be denied – which follows “similar action by other providers”.

“Even with your direct consent in person or over the phone, we cannot 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 to their Nationwide accounts.

As to the reason for these decisions, both banks pointed to the Financial Conduct Authority (FCA), which had issued warnings about the risks of buying crypto.

And not only this regulator, but the International Monetary Fund (IMF) and the Financial Action Task Force (FATF) also continues to warn banks against allowing crypto purchases, citing what they say are the risks that crypto-assets can pose to the traditional financial system.

United States Federal Reserve (Fed) also said that financial institutions should be cautioned about the “potentially increased liquidity risks” that accompany certain sources of funding from crypto-related entities.

Other UK institutions have tightened restrictions on crypto-related businesses in recent years, including Santander Bank SA, Lloyds Banking Group PlcAnd Natwest Group Plc.

Notably, while many banks have limits related to crypto exchanges, Binance remains a particularly popular entity to impose restrictions.

Meanwhile, the crypto-friendly bank silver gate announced earlier this week that it would not be able to file its annual financial report in the United States Security and Exchange Commission (SEC) in time and was evaluating its ability to stay in business. The bank’s shares fell more than 55% on Thursday after the announcement.

Silvergate was among the lenders hardest hit by the fall in the FTX exchange in November of last year. It suffered a bank run and had to sell $5.2 billion in debt securities at a large loss to cover around $8.1 billion in user withdrawals. As a result, it suffered a loss of $718 million, which would have exceeded the bank’s total profits since 2013.

This led to a number of crypto firms that had done business with the crypto bank to rush for exits. MicroStrategy And Attached denied having significant exposure to Silvergate and several other crypto companies, including Coinbase, Paxos, Digital GalaxyAnd krakenended their relationship with the bank after its filing on Wednesday.


Learn more:
– Silvergate Bank shares plunge after DOJ investigation report into ties to FTX and Alameda
– Boris Johnson’s brother steps down as adviser to Binance unit amid ‘financial transparency concerns’ and market turmoil – here’s what happened

– “The UK needs to move faster” on crypto regulation
– UK Law Enforcement and Regulators Join Forces to Bust Illegal Crypto ATMs

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.