UPDATE: UK banks are now blocking nearly 40% of payments to cryptocurrency exchanges, presenting a significant obstacle to the sector’s growth, according to a recent survey from the UK Cryptoasset Business Council (UKCBC). This alarming trend comes as regulators work to finalize a comprehensive framework for digital assets.
The report, titled “Locked Out: Debanking the UK’s Digital Asset Economy,” found that 80% of major exchanges, including Coinbase, Kraken, and Gemini, have experienced increasing disruptions over the past year. One platform reported close to £1 billion in rejected transactions. These restrictions include outright blocks from banks like Starling Bank and Virgin Money, as well as strict limits imposed by Barclays and HSBC.
“Blanket restrictions from banks are designed to constrain the growth of the crypto industry,” stated one surveyed exchange. Despite being registered with the FCA, firms report 100% of banks provide no explanations for declined transactions, leading to widespread frustration within the sector.
The UKCBC warns that these practices may violate the Payment Services Regulations 2017 and the FCA Consumer Duty rules. As the HM Treasury laid the Financial Services and Markets Act 2000 (Cryptoassets) Regulations before Parliament on December 15, 2025, with a full rollout anticipated by October 2027, the disconnect threatens London’s position as a fintech leader.
In a survey of ten centralized exchanges that handle billions in volume, respondents rated banking access difficulty at 7.9/10, higher than in countries like Singapore and Dubai. A staggering 70% of firms described the environment as “more hostile” than the previous year, with 60% of users expressing their frustration over disrupted transactions.
One exchange lamented: “We need support. If we are registered with the FCA, it should not be this challenging for UK businesses,” highlighting the emotional toll on firms striving to innovate in the UK market.
The mounting barriers have compelled many businesses to prioritize markets outside the UK. Nearly £1 billion in observable declines indicates a significant impact on investment and job creation. A vast 70% of exchanges linked these restrictions to reduced scaling, hiring, and product launches in the UK.
Meanwhile, challenger banks like Revolut and Monzo allow transfers but impose limits, while established banks like NatWest and Santander enforce tighter controls. For instance, NatWest limits daily transactions to £1,000 and monthly to £5,000.
This pattern of clampdowns is not new. Barclays began blocking crypto purchases with credit cards on June 27, 2025, citing risks and lack of protections. Many banks, including HSBC and Lloyds, have adopted similar stances over the past few years.
Investor backlash is growing. Michael Healy, managing director at IG UK, stated: “We’re in a damaging position where millions of people are effectively being locked out of crypto just because of who they bank with.”
The FCA reports that 12% of UK residents now own cryptocurrencies, an increase from 10% in the previous year. Former Chancellor George Osborne warned that the UK risks lagging behind global competitors in the crypto market, emphasizing the need for regulatory clarity.
The UKCBC is advocating for reform, urging the FCA and the government to mandate case-by-case reviews for FCA-registered firms and to establish risk frameworks that differentiate among exchanges. They stress the importance of removing unnecessary barriers to ensure a competitive environment.
As the Bank of England considers limits on bank exposure to cryptocurrencies by 2026, the tension between maintaining financial stability and fostering innovation in the UK’s digital economy continues to escalate. The urgency for a solution is palpable, as users voice their frustrations over what they perceive as “shadow-banning” of the crypto industry.
With calls for non-bank alternatives growing louder, stakeholders are left wondering how long the current restrictions will persist, and whether the government will take decisive action to support the UK’s crypto ambitions.
