HSBC and Nationwide block transactions with crypto exchanges
HSBC Holdings and Nationwide Building Society joined major UK banks in banning purchases of bitcoin and other cryptocurrencies via credit card following a recent regulatory crackdown. The move is another blow for the crypto traders who recently saw a sizable number of banks deciding not to finance the wobbly asset class.
The decision follows several of the biggest UK banks banning cryptocurrency transaction over the past few months, as part of a global crackdown led by major lenders and credit card issuers. While HSBC and Nationwide are not the first, but the action exacerbates pressures and make it more difficult for enthusiasts to buy into the market as more other banks could shortly follow suit.
Describing the activity as “high risk and heavily used for criminal purposes,” HSBC told cardholders they are no longer allowed to purchase cryptos or receive incoming transfers from related exchanges or merchants.
Following the bankruptcy of FTX, the world’s second largest cryptocurrency exchanges, Lloyds, Barclays and RBS cut off card purchases and transactions involving cryptocurrency. The banks fear that allowing purchases of cryptocurrencies using money borrowed on credit cards could leave them on the hook if the buyers’ bets were wrong and couldn’t repay their debts.
Santander UK, the UK unit of banking giant Banco Santander, also placed restrictions on crypto transactions for its customers. In a note to customers, the bank said this includes a £1,000 limit on individual transactions with crypto exchanges and a £3,000 limit on total monthly transactions. However, the London-based bank doesn’t limit funds transferred from crypto exchanges back into Santander accounts.
Nationwide customers are also restricted to a £5,000 limit for individual cryptocurrency transactions using debit-card purchases.
Even before FTX fallout, many UK banks banned its customers from transferring funds to Binance after the Financial Conduct Authority (FCA) issued a warning it was not permitted to undertake any regulated activity.
Taking their lead from the City watchdog, many retail banks in the UK have since announced that they will stop customers from making payments to crypto trading platforms. However, customers have become frustrated as these banks not only banned withdrawals to crypto exchanges, but also blocked money transfers from exchanges into their bank accounts.