UK Parliament Investigates Crypto Debanking Amid £1B in Rejected Transactions

UK Parliament has launched an investigation into crypto debanking after it was revealed that nearly two in five attempted payments to cryptocurrency exchanges are being blocked or delayed.

A survey by the UK Cryptoasset Business Council found that approximately 40% of all bank-to-exchange transfers in the UK are being rejected. One exchange reported that banks had turned away nearly £1 billion in customer transactions over a single year.

The inquiry, led by the Crypto and Digital Assets All-Party Parliamentary Group, will examine the impact of debanking on crypto businesses and their employees. The group will also look into why banks are blocking payments to crypto exchanges, despite some being registered with the Financial Conduct Authority (FCA).

Banks such as Chase UK, Starling Bank, TSB, Virgin Money, and Metro Bank have been found to impose complete bans on bank transfers and card payments to crypto exchanges. Major incumbents like Barclays and HSBC cap transfers at £2,500 per transaction and £10,000 over a 30-day period.

The FCA's Consumer Duty has reinforced the message that banks must avoid allowing fraudulent transactions, which has created an asymmetric incentive structure. Banks are now liable for up to £85,000 if they allow a payment to proceed that is later found to be authorized push payment (APP) fraud.