UK Banks Tighten Access To Cryptoassets For Retail Customers

Nationwide Building Society and HSBC Holdings plc (NYSE: HSBC) implemented new limits on retail customers’ access to cryptocurrency assets, following industry scandals and regulatory warnings.

What Happened: Nationwide Building Society announced Thursday it would be applying daily limits of £5,000 ($5,965) on debit-card purchases of cryptocurrency assets, and will no longer allow credit cards to be used for crypto purchases.

HSBC Holdings has barred customers from making crypto purchases via its credit cards since last month.

“This is because of the possible risk to customers,” HSBC said in an emailed statement to Bloomberg.

Both banks cited warnings issued by the Financial Conduct Authority (FCA), which labeled crypto as high risk for several years.

The FCA's warnings prompted several U.K. banks to introduce crypto-specific limits on their customers with Banco Santander SA, Lloyds Banking Group Plc (NYSE: LYG) and Natwest Group Plc (NYSE: NWG) among them.

Most major banks have also implemented exchange-specific restrictions, with Binance Holdings Ltd. (CRYPTO: BNB) being the most popular target.

Also Read: FTX Faces Massive $2.2B Asset Shortfall In Wallets Associated With FTX.com, FTX.US Exchanges

Why It Matters: The collapse of cryptocurrency exchange FTX (CRYPTO: FTT) in November has raised further concerns about the risks of cryptocurrencies. 

Global bodies, including the Financial Stability Board, the International Monetary Fund and the Financial Action Task Force have repeatedly cautioned banks against the potential risks that cryptocurrency assets can pose to the traditional financial system.

U.S. banks with close ties to the crypto sector are also facing growing scrutiny.

Silvergate Capital Corp. (NYSE: SI), a crypto-friendly bank, on Thursday sank to a record low after saying it was reviewing whether it could remain viable.

Regulators, including the Federal Reserve, have urged financial institutions to be cautious of “potential heightened liquidity risks” presented by certain sources of funding from crypto-related entities.

Read Next: Silvergate Capital Plagued By 'Regulatory And Liquidity Challenges,' JPMorgan Analyst Says

Photo: max.ku via Shutterstock