UK Banks Ramp Up Crypto Restrictions With New Retail Limits

Emily Nicolle, Bloomberg News

A bitcoin, center, and other cryptocurrency logo signs outside a cryptocurrency exchange kiosk in Istanbul, Turkey, on Tuesday, April 26, 2022. Both tech stocks and Bitcoin have notched big swings this year as the Federal Reserve becomes less accommodative as part of its fight to combat inflation. Photographer: Erhan Demirtas/Bloomberg , Bloomberg

(Bloomberg) -- Nationwide Building Society and HSBC Holdings Plc toughened limits on retail customers’ access to cryptoassets in the last week, becoming the latest UK banks to impose curbs after industry scandals and regulatory warnings.

Nationwide is applying daily limits of £5,000 ($5,965) on debit-card purchases of cryptoassets, the building society informed customers on Wednesday, while its credit cards can no longer be used to buy crypto. HSBC said it barred customers from making crypto purchases via its credit cards from last month.

“This is because of the possible risk to customers,” HSBC said in an emailed statement. Both banks pointed to warnings issued by the Financial Conduct Authority, which has labeled crypto as high risk for several years.

The lenders join Banco Santander SA, Lloyds Banking Group Plc and Natwest Group Plc among the institutions that have placed crypto-specific limits on UK customers in recent years. Most of the major banks have also implemented exchange-specific restrictions, with the world’s largest crypto platform Binance Holdings Ltd. the most popular target.

Read: UK Treasury Plans to Bring Crypto Under City Rules (1)

The collapse of crypto exchange FTX in November has prompted fresh warnings about the dangers of crypto. Global bodies including the Financial Stability Board, the International Monetary Fund and the Financial Action Task Force have repeatedly cautioned banks against inviting the risks that cryptoassets can pose to the traditional financial system.

Several US banks with close ties to the sector are facing growing scrutiny. Silvergate Capital Corp., the crypto-friendly bank, sank to a record low Thursday after saying it was reviewing whether it can remain viable. Regulators including the Federal Reserve have told financial institutions to be wary of “potential heightened liquidity risks” presented by certain sources of funding from crypto-related entities.

--With assistance from Harry Wilson and William Shaw.