HSBC and Nationwide are the latest banks to limit customers’ crypto purchases
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(Kitco News) – The relationship between banks and crypto communities continues to deteriorate as two leading banks in the UK, HSBC Holdings and Nationwide Building Society, have announced new restrictions on the purchase of cryptocurrencies by their customers.
Bloomberg was the first to report the story on Thursday, saying the move to restrict certain crypto purchases was in response to warnings from UK regulators and the struggles the industry has seen over the past 18 months.
Nationwide has released an update for customers regarding the new limits. “We have placed some restrictions on buying cryptocurrency with your card,” they wrote. “These apply when we identify payments to crypto exchanges.”
For adults with current accounts, there is now a £5,000 ($5,987) daily limit on purchasing crypto assets via debit card, and credit cards can no longer be used for crypto transactions. These limits apply whenever a customer uses their card to make a payment, and this includes using digital wallets like Apple Pay or Google Wallet.
Account types affected by this change include FlexStudent, FlexGraduate, FlexBasic, FlexAccount, FlexDirect, and FlexPlus. Those with a FlexOne account can only spend £100 ($120) a day on crypto purchases.
Any attempt to spend more than that amount in cryptocurrency on any given day will result in a declined transaction, the bank said. For joint accounts, daily limits apply to each card and for multi-account accounts, the limit applies to each account.
Last month, HSBC sent an email to customers notifying them that they can no longer buy crypto with their credit card, citing “the potential risk to customers.”
“Starting February 23, 2023, we will no longer allow purchases of cryptocurrency with our credit cards,” HSBC said in an email to customers. “That’s because of the potential risk to you. The Financial Conduct Authority has warned against investing in crypto assets as they are considered very risky, speculative assets.”
Nationwide and HSBC have joined a growing list of UK banking institutions that have imposed restrictions on working with crypto services, including Santander, Natwest Group and Lloyds Banking Group.
Binance, the world’s leading crypto exchange, is the main target of many restrictions as it currently dominates the crypto trading landscape and has a presence in more than 140 countries. In August 2021, HSBC banned credit card payments to Binance, citing concerns about the exchange’s regulatory status.
These actions by UK-based banking institutions follow the release in February of a proposed regulatory framework for dealing with cryptocurrencies in the UK. The regulatory framework outlined in the report aims to achieve four overarching policy objectives: fostering growth, innovation and competition in the UK; enabling consumers to make well-informed choices with a clear understanding of the risks involved; protecting UK financial stability; and to protect the integrity of the UK market.
In February, the Financial Conduct Authority (FCA) also announced a crackdown on illegal crypto ATMs (ATMs) operating in the country, shutting down several unregistered ATMs and eliminating another access point for buying crypto, as well as a proposal from the FCA , who could see crypto executives sentenced to two years in prison for violating rules related to the promotion of cryptocurrency products.
Since the collapse of FTX, global regulators have stepped up their alerts and enforcement actions against the crypto industry to protect investors. These include actions by the Financial Stability Board, the International Monetary Fund, and the Financial Action Task Force, all of which have repeatedly warned banks about the risks cryptoassets pose to the traditional financial system.
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