Banks Ban Buying Cryptocurrencies After FTX Collapse

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Citing “recent events” from the cryptocurrency market, the Starling Bank, one of the largest digital banks in the UK, has decided to ban all transactions to cryptocurrency exchanges and other digital asset platforms, meaning that bank customers can no longer buy or sell cryptos using the bank account.

As justification, the bank said it wants to “protect its customers”, preventing them from spending their own money with what they want.

“We are constantly reviewing how we keep you and your money safe. As part of these reviews, we no longer provide support for buying and selling cryptocurrencies by debit card, bank transfer in sterling or bank transfer in other currencies. We made this decision to help protect our customers. We will not charge you for any declined payment.” said the bank in a statement this Wednesday ().

Starlink Bank follows several other UK banks that have decided to impose restrictions on cryptocurrencies, joining banks such as Santander, RBS, Lloyds and Barclays, the largest banks in the country.

Banks ban buying cryptocurrencies

The bans come amid the third-largest cryptocurrency exchange scandal of the world, FTX, which went bankrupt and left at least 1 million investors at a loss.

On Twitter, Starling bank said it considers activity with cryptocurrencies “high risk” and therefore decided to ban all card payments to cryptocurrency exchanges and will not accept deposits from such platforms.

Following, a spokesperson for the bank said that although the purchase of cryptocurrencies was allowed before, they are high risk and used for criminal purposes, hence the decision.

“Today’s message was to ensure that customers who have made such transactions in the past, but not recently, are aware of this”, said a spokesperson for Starling.

“The innovative technology and thinking behind cryptocurrencies has great potential advantages; however, they are currently high risk and heavily used for criminal purposes, and as such, we no longer support them.” – added.

Hi there 👋 We always review our position in relation to financial crime. We consider crypto activity to be high risk. We’ve taken the decision to prevent all card payments to crypto merchants and to implement further restrictions on outgoing and incoming transfers.

— Starling Bank (@StarlingBank) November 22,

UK steps up crackdown on cryptocurrencies

O UK is one of the countries that most crack down on cryptocurrencies, as such, banks in the country are gradually banning transactions to cryptocurrency exchanges.

Earlier this month, before the collapse of brokerage FTX, Santander announced a limit on transactions of money sent to cryptocurrency exchanges. As a justification, the bank said that investments in cryptocurrencies can be high risk, citing that several clients have been victims of fraud in recent months.

Banks Lloyds , Barclays, the two largest in the country, have also created measures to prevent cryptocurrency purchases, including blocking credit card transactions and blocking bank transfers to brokerages.

UK financial regulators are also starting to act in response to the FTX meltdown.

Bank of England vice-president said cryptocurrency regulation is necessary to prevent the next FTX-style implosion from turning into a broader financial meltdown.

Following the regulator’s lead, many UK banks have since announced that they will prevent customers from make payments to cryptocurrency trading platforms.