UK lawmakers warn banks' crypto stance could stifle industry growth

Warning from Parliament

A cross-party group of UK lawmakers has issued a stark warning: banks' continued refusal to take on cryptocurrency firms as clients could seriously stunt the growth of the country's digital asset industry. In a new report, they argue that without reliable access to banking services, crypto businesses are being pushed to operate from less favourable jurisdictions or, worse, forced to shut down entirely.

The report, published by the All-Party Parliamentary Group on Crypto and Digital Assets, points to a persistent problem. Despite the UK government's ambition to position the country as a global hub for crypto and fintech, many high-street and challenger banks remain wary of dealing with firms in this sector, citing concerns over money laundering and regulatory uncertainty.

Disconnect Between Policy and Practice

Lawmakers note a clear disconnect. On paper, the Financial Conduct Authority (FCA) has established a registration regime for crypto firms. In practice, however, banks often take a far more conservative approach, declining services even to those companies that are fully authorised. This leaves legitimate businesses struggling to open basic current accounts, secure payment processing, or obtain insurance.

The result, the report suggests, is a two-tier system where regulatory compliance is no guarantee of financial inclusion. One MP involved in the inquiry described the situation as "a serious barrier to innovation," adding that the UK risks losing its competitive edge to more welcoming markets in Europe, the Middle East, and Asia.

Impact on Businesses

For crypto startups, the banking bottleneck is not merely an inconvenience; it can be existential. Without a bank account, a company cannot pay salaries, rent office space, or settle supplier invoices. Some firms have resorted to holding their treasury in stablecoins or using overseas banking partners, which introduces additional legal and operational risks.

The report cites unnamed industry testimony describing how some banks have closed accounts with little notice, giving no clear reason. This unpredictable behaviour, lawmakers say, undermines trust and deters both domestic founders and foreign investors from committing to the UK market.

Call for Clearer Guidance

The parliamentary group is now urging the government and the FCA to issue more explicit guidance to banks, making it clear that serving registered crypto firms is acceptable and, indeed, necessary for the sector to thrive. They also recommend that banks be required to justify any refusal in writing, and that a formal appeals process be established.

"We are not asking for a free pass," the report states. "We are asking for consistency and transparency. If a firm has passed the FCA's own checks, a bank should not be able to blacklist it without a legitimate, documented reason."

A Global Context

The issue is not unique to the UK. In the United States, a similar debate has raged over "Operation Chokepoint 2.0," with regulators accused of pressuring banks to sever ties with crypto clients. In Europe, the Markets in Crypto-Assets Regulation (MiCA) has provided a unified licensing framework, but banks there have also been slow to embrace the sector.

The UK's approach, however, is being watched closely. With the government's stated ambition to be a crypto hub, the gap between policy and practice is particularly glaring. Lawmakers warn that if banks do not change their stance, the UK will lose out on jobs, tax revenue, and its reputation as a forward-looking financial centre.

What Happens Next

The report will now be submitted to the Treasury and the FCA for consideration. Industry watchers will be looking for concrete steps—such as updated guidance or a public statement from the Bank of England—within the next few months. Whether the UK's banks will heed the call remains to be seen, but the pressure is clearly mounting.