The latest financial institution to forbid crypto-related transfers and activity for its cardholders is the British digital bank Starling. Its customers won’t be able to buy cryptocurrencies like Bitcoin or accept incoming transactions from exchanges or retailers who deal in cryptos. The online bank announced on Twitter and in a statement to customers, citing the alleged significant dangers associated with trading cryptocurrencies.
Cryptocurrencies are “high risk and heavily used for criminal purposes,” the bank added. According to a Starling representative, the bank has long imposed “varying degrees” of limitations on transactions using cryptocurrencies. “We recently tightened restrictions on inbound and outbound transactions by card and bank transfer,” said the representative, adding:
”The innovative technology, and thinking, behind cryptocurrencies have great potential advantages. However, right now, they are high risk and heavily used for criminal purposes, and, as such, we no longer support them.”
The actions of the bank coincide with the ongoing industry crisis involving FTX, a significant cryptocurrency exchange, which is accused of misusing customer cash alongside its sister company Alameda. According to FTX’s bankruptcy declaration, the corporation owes over $3 billion to its 50 biggest creditors, with more than 1 million creditors in total. Certain members of the cryptocurrency community think that while some bank limits on cryptocurrency activities appear sensible, a total ban is not the wisest course of action.
“While it is understandable to block individual transactions that banks believe are outright fraud, banning legitimate transactions involving an entire industry is unacceptable,” SovrynBTC argued in a tweet. The cryptocurrency enthusiast also questioned why banks did not concern about numerous other dangerous transactions made by their clients, such as stock trading or gambling.
The latest limitations are not the first time Starling has strictly enforced regulations regarding crypto-related behavior. In May 2021, the bank temporarily stopped making payments to several cryptocurrency exchanges due to similar worries, claiming high amounts of suspected financial wrongdoing. About a month later, Starling began its crypto trading activities. The restriction was placed after Santander UK restricted client deposits to cryptocurrency exchanges to a cap of 3,000 British pounds ($3,588) per month and 1,000 British pounds ($1,196) for each transaction.
Other British banks allegedly outright prohibited transactions involving cryptocurrencies. In June last year, TSB bank forbade its 5.4 million clients from purchasing Bitcoin. Other significant lenders, including Virgin, Lloyds, and NatWest, allegedly prohibited credit card use for bitcoin transactions in 2018.
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