Industry reports show UK banks are increasingly blocking or delaying payments to crypto exchanges, creating a bottleneck while the national rules are being developed. The mismatch between tighter banking access and a formal regulatory agenda threatens to slow business activity and investor confidence in the UK crypto sector.
Across January reporting, roughly 40% of payments destined for cryptocurrency exchanges were being blocked or delayed, according to an industry study. A survey by the UK Cryptoasset Business Council (UKCBC) found 80% of crypto firms reported rising customer payment friction over the prior year, and 70% described the banking environment as hostile. One major exchange reported nearly £1 billion in declined transactions in 2025 to bank-side rejections.
Some banks as Virgin Money, Metro Bank, Starling, TSB and Chase UK have implemented total blocks on bank transfers and debit-card payments to crypto exchanges. Meanwhile, other banks as Barclays and HSBC UK, have imposed strict caps: £2.500 per transfer and £10.000 over a 30‑day rolling period.
Regulatory context and banks’ rationale
Banks justify the heightened controls with three concerns: financial crime risk, inconsistent global accountability for crypto-service providers, and customer protection. HM Treasury’s national risk assessment in July 2025 flagged cryptoassets as a growing money‑laundering concern, reinforcing banks’ compliance sensitivity.
At the same time, the UK has advanced legal frameworks aimed at bringing clarity to digital assets, including the Property (Digital Assets etc) Act 2025 and a planned FCA authorization regime. The FCA regime is scheduled to become fully operational in 2027, that remains as the most important regulation for banks, crypto platforms and customers.
Industry groups argue that blanket banking restrictions — applied without individual assessments — could conflict with existing rules such as the Payment Services Regulations 2017, the FCA’s Consumer Duty and competition law.
The present mix of stricter bank-side controls and an unfolding regulatory framework has produced a paradox: policy-makers are erecting a perimeter for supervised activity in terms of crypto assets, while the basic financial plumbing used by exchanges and customers is being withdrawn or constrained.
Investors, exchanges and treasuries will now follow implementation of the FCA authorization regime due in 2027 as the decisive test of whether regulatory clarity can restore normalised banking access. If banks do not move toward a proportionate, risk-based approach that differentiates regulated firms from higher‑risk actors, trading liquidity, customer onboarding and business investment are likely to shift to more accommodating jurisdictions, amplifying costs for UK market participants and institutional counterparties.
