The City of London is home to some of the worlds leading financial businesses and is no doubt the biggest centre across Europe. In fact according to the Global Financial Centres Index 2013, London ranks at a cool first place.
With that in mind one might assume that the UK would be the obvious adaptive leader for emerging financial technologies such as cryptocurrencies.
Unfortunately this is far from the case and has been confirmed by hundreds of Bitcoin related startups that have been denied business bank accounts in the UK due to the lack of crypto related regulations (and rampant bureaucracy).
Suggesting virtual currencies are too new or untested is no excuse anymore either. Cryptocurrencies are not ‘new’ at all, especially since their explosive growth in the past few years. For example Bitcoin, the most popular virtual currency to date has developed handsomely from its message board roots to becoming a mainstream digital currency that is flourishing globally with a total market cap value that is just short of £4.5 billion. Not too shabby.
Its success seems to have struck fear into the current financial community resulting in a very blasé corporate response (for the most part) despite Bitcoin related businesses extensively trying to work with banks as opposed to replacing them.
Although Bitcoin is decentralised and can effectively operate without a banking institution, it has become very obvious that banks are still required and will continue to have their place in a crypto world.
However rather than sharing ‘free hugs’ in celebration of this inevitable technology, crypto hopefuls are instead being met with pitchforks and abrupt rejections.
Is this just another show of centuries old, lethargic financial moguls flexing their power and stomping out any better alternatives.
The Financial Conduct Authority(FCA) is the independent regulatory body in the UK whose purpose is to regulate financial firms whilst providing services to consumers and maintaining the integrity of the UK’s financial markets.
The FCA has stated that it does not regulate digital currencies and has no future plans to do so.
The ramifications of not being legally authorised means banks can openly refuse support for crypto related accounts on the grounds that it is high risk money that could be associated with laundering, seamless transactions and cross border ease for financing crimes around the world.
This leaves for example Bitcoin businesses in a state of limbo where they are forced to hobble together self-regulatory protocols that are never officially approved. So despite their usefulness (and genuine legality) the wings of these services are indefinitely clipped.
It is looking more and more like the lack of regulation or guidance from the UK government is nothing more than a ruse to thwart crypto businesses and disrupt the growing ecosystem.
German based Bitcoin exchange Kraken has already signed an exclusive deal with Fidor, a bank that has seemingly taken Bitcoin by the horns and is providing a range of products in partnership with Kraken.
Bitcoin exchange Safello has already won the backing of Swedish bank ‘Handelsbanken’ which could be a hint that Scandinavian countries(highly ranked in the Index of Economic Freedom) could be early adopters of cryptocurrencies.
It remains to be seen just how long this tribal repression by the banks and UK government will continue.
MetroBank stopped working with Bitcoin exchange Intersango. Barclays also stopped working with Mtgox, Blockchain and Intersango.
9 thoughts on “UK Banks Strangling Bitcoin Startups”
The UK will be shooting itself in the foot if they do not work with Bitcoin businesses.
BITCOIN IS HERE TO STAY! WORK WITH THEM OR LOOSE OUT TO THEM.
You can’t even buy Bitcoins without a bank now! I read the other day that the UK government shutdown ZipZap which was the only way to buy Bitcoins with cash.
The UK government did NOT shut down ZipZap. From my experience, .uk.gov and in particular HMRC have been excellent when it comes to engaging the Bitcoin community. ZipZap’s partners have decided to suspend the service because they want to do further legal research on it, so it is them that decided to put a hold on things, not the government.
Bitcoin exchanges work pretty much exactly the same as “currency exchanges” as in where you purchase Euros/Zloty etc… for your holiday.
Banks provide services to these type of companies so why can’t they work with Bitcoin ones?
I tried to buy £150 Bitcoins from CoinBase using wire transfer from Metro Bank and they phoned me saying that it was a suspicious transaction and declined it.
This HAS to STOP!!!
There will be decentralized exchanges; software that allows any individual to buy/sell Bitcoin for local currency.
Fidor bank and Kraken have plans to open up shop in the UK. Hopefully sooner than later!
The banking system blocking the evolution of Bitcoin then it is undermining its own interest. Bitcoin is really a software program and the law does not prevent transactions in software cross-border or otherwise.
Institutional Actions taken will affect the trade of goods and service bartered for Bitcoin or other related software programs. Users will simply move the operation to more friendly location depriving the local community and its government of revenue and even jobs.
To me blocking of these developments is criminal in its personal interest.