UK Parliament probes bank account restrictions on crypto firms
Inquiry follows new UK crypto regulatory framework due to take effect in October 2027
Briefing
- The UK's Crypto and Digital Assets All-Party Parliamentary Group has launched a formal inquiry into banks that have refused accounts or imposed transaction restrictions on crypto firms and consumers, raising questions about whether the practice is suppressing investment and competition.
- The probe is cross-party and explicitly examines whether banking barriers are holding back the UK crypto sector, making it a potential precursor to legislative or regulatory intervention.
- The inquiry arrives weeks after the UK published a new crypto regulatory framework scheduled to take effect in October 2027, creating a period of heightened parliamentary scrutiny over the sector's operating conditions.
- Firms and investors should watch whether the APPG's findings feed into the regulatory framework's implementation rules, particularly around payment access obligations for crypto businesses.
Analysis
- UK crypto firms gain a credible path to payment access obligations by October 2027, reducing the structural disadvantage from banking denial that has constrained their operating scale. If the APPG inquiry produces recommendations that feed into the regulatory framework's implementation rules, banks face new compliance costs around account provision, shifting the burden from crypto firms to lenders. This is most consequential for UK-domiciled crypto exchanges and custodians competing with EU-licensed peers.
- Goldman Sachs's endorsement of the Crypto Clarity Act and this parliamentary probe together signal a coordinated institutional push across two of the world's largest financial centres to normalise crypto's banking access. If both the US Crypto Clarity Act and UK framework advance concurrently, crypto-native firms with multi-jurisdictional operations face a step-change improvement in their cost of capital and operational risk, making UK-listed or US-regulated crypto intermediaries incrementally more investable on a 12-18 month horizon.
Historical Context
- 2023
Following the Signature Bank and Silvergate Bank collapses, US banks broadly withdrew from crypto banking relationships under Operation Choke Point 2.0, forcing UK and EU crypto firms to rely on a narrow set of payment providers. The UK APPG inquiry directly addresses the same access-denial dynamic that destabilised US crypto firms' banking infrastructure in 2023.
- 2021-2022
The FCA's registration regime for crypto asset businesses required firms to meet anti-money-laundering standards, yet banks continued to deny accounts even to FCA-registered entities, creating an operational paradox where regulation and banking access moved in opposite directions. This gap is the direct antecedent to the current parliamentary inquiry.
Connected Events
Goldman Sachs CEO David Solomon backs Crypto Clarity Act amid banking industry split
Goldman Sachs CEO David Solomon's endorsement of the Crypto Clarity Act, breaking from JPMorgan and banking trade groups, signals that major financial institutions are diverging on whether to accommodate crypto's banking needs, directly paralleling the UK parliamentary pressure on banks to stop denying accounts to crypto firms.
Kraken parent Payward expands tokenized equities to Hong Kong, UK and South Korea
Kraken parent Payward's expansion of tokenized equities into the UK among other jurisdictions means the banking access question directly gates the commercial viability of tokenized asset platforms seeking to operate in the UK market, tying regulatory clearing to operational launch timelines.
Further reading
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