Cryptocurrency investors in the United Kingdom (UK) are feeling the effects of regulatory pressure directed at companies offering crypto payments and transfer services. NatWest, one of the country’s leading consumer banks on Tuesday announced a raft of measures that would see restrictions imposed on customers transferring funds to crypto exchanges.
UK’s NatWest Bank Takes Action To Protect Consumers After SVB Collapse
The move by NatWest comes after the United States suffered a blow last week when three of its banks collapsed: Silvergate, Silicon Valley Bank, and Signature Bank. Crypto investors will now have to deal with the imposed daily and monthly caps on transactions or find other alternatives.
According to Tuesday’s announcement, NatWest is capping daily transactions at $1,000 British pound – worth around $1,200 to and from crypto exchanges. Similarly, crypto investors will have to deal with a 30-day payment limit of 5,000 GBP – worth roughly $6,000.
Stuart Skinner, NatWest’s head of fraud protection said that the latest restrictions aim at protecting consumers from throwing away “life-changing sums of money.” Skinner reckoned that the crypto market is risky owing to a growing number of scams in the industry.
“We have seen an increase in the number of scams using cryptocurrency exchanges and we are acting to protect our customers,” Skinner said in Tuesday’s announcement.
Skinner also took the time to encourage crypto investors to embrace self-custody, which ensures they have control over their assets at all times. He cautioned against the trend of delegating crypto assets’ storage to third parties, which in this case are centralized crypto exchanges like Binance and Coinbase.
“You should always have sole control of your cryptocurrency wallet and nobody else should have access. If you didn’t set the wallet up yourself or can’t access the money then this is likely to be a scam,” NatWest’s head of fraud protection advised investors.
NatWest believes crypto scammers are in the race to defraud unsuspecting consumers amid the rising cost of living in Europe and the world over. They promise high returns—much higher than what you would find in the traditional financial sector.
Some scammers, according to Skinner, are capitalizing on “a lack of understanding of how cryptocurrency markets work.” They use dubious means to lure individuals into transferring funds to exchanges with people aged above 35 being at the highest risk of falling victim to the criminals.
“Criminals play on a lack of understanding of how cryptocurrency markets work and their unpredictability to encourage investors to transfer money to exchanges, which are often set up in the customer’s own name by the criminal or by the victim, under duress from the criminal,” the bank said in the announcement.
NatWest was also keen to provide some key steps investors can take to avoid falling into the traps of crypto scams. In addition to never sharing private keys, the bank instructed consumers to read all information provided by companies.
Furthermore, NatWest asked its customers to avoid making rushed decisions on investment and to stay clear of fake websites. According to NatWest giveaways, common in the crypto industry, are prone to scammers.
This is not the first time NatWest has moved to disrupt transactions in the crypto industry, considering its decision to stop all credit and debit card payments to the world’s leading crypto exchange company, Binance in 2021.
Could The UK Crypto Sector Crumble For Lack of Banking Support?
On Tuesday, Business2Community reported on PaySafe, an online payments provider’s decision to shut down transfers to Binance offered by its subsidiary Skrill Limited.
The moves taken by NatWest and PaySafe suggest a growing rift between the crypto industry and regulated financial institutions in the wake of the US banking nightmare.
Banks around the world are likely to move away from the crypto sector amid questions over what led to the sudden demise of Signature, Silvergate, and SVB banks in the US. All three United States banks were primary partners of leading crypto firms like Coinbase, Ripple, and Circle, among others.
Banks in the UK are putting more pressure on cryptocurrency investors, while US authorities have been issuing warnings about the risks involved in crypto businesses this year. Although the banking crisis has mainly affected the US, the UK’s major banks are beginning to take action.
Investors and stakeholders in the crypto market have already noticed a pattern that could materialize as a coordinated crackdown fronted by banks in the UK.
“This looks like the start of a coordinated crackdown on crypto, coming from the UK banking sector. We’ve already seen this strategy take shape in the United States,” a former HSBC employee told the Financial Times.
As NatWest and PaySafe disengage from crypto firms or drop crypto-based payments, there is a brewing hunt for new banking partners, as long as crypto players can find willing parties to take them on.
According to Conor Ryder, an analyst at Kaiko Research firms may start looking beyond the borders for services if the stalemate between banking institutions in Europe and crypto firms – not to mention the element of increasing regulatory pressure.
“Regulatory clarity in Europe… paints a stark contrast to the ambiguity in the US, with firms facing new regulatory headwinds seemingly every day. This creates an increasingly challenging environment for the operations of any crypto organization,” Ryder outlined.
Earlier this week HSBC made a move on SVB’s UK branch in a deal aimed at saving the subsidiary, for a nominal sum of £1. The acquisition involves taking on over 3,000 customers of SVB UK.
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