UK PARLIAMENT RIDES NEW WAVE OF CRYPTO BANKING DEBATE

In brief: 

₿- The Crypto and Digital Assets APPG will investigate whether legitimate UK crypto businesses and consumers face barriers to bank accounts, payment services, and crypto-related transactions.

₿- The inquiry will examine how banks can manage financial crime risks while maintaining fair access for compliant crypto firms, with its findings potentially offering a blueprint for addressing similar crypto banking challenges worldwide.

The UK’s crypto and digital assets industry is facing renewed scrutiny over access to banking services after the Crypto and Digital Assets All-Party Parliamentary Group (APPG) launched a Parliamentary Inquiry into crypto banking access. The inquiry will examine whether legitimate crypto businesses and consumers can access appropriate banking services and whether restrictions imposed by banks on crypto-related transactions are proportionate.

Bank account closures, difficulties opening business accounts, payment restrictions, transfer limits, and limited access to related professional services such as insurance have remained major concerns for cryptocurrency companies. The APPG aims to determine how widespread these issues are and whether they are creating unnecessary barriers for firms seeking to operate, invest, and expand in the UK.

Why banks and crypto companies remain at odds

The relationship between traditional banks and cryptocurrency companies remains complicated as financial institutions balance risk management with the growing demand for digital asset services. Banks have legitimate obligations to combat fraud, money laundering, sanctions violations, and consumer scams, while the crypto industry argues that these risks should not automatically justify restricting access to banking services for legitimate and compliant businesses.

A risk-based approach to crypto banking could provide a middle ground. Rather than treating cryptocurrency companies or crypto-related transactions as inherently high risk, banks could assess individual businesses based on their regulatory status, compliance frameworks, transaction monitoring, and exposure to financial crime. Greater cooperation between banks, regulators, and crypto firms could also help establish clearer standards for responsible access to financial services.

The debate has become particularly important as crypto becomes increasingly integrated into mainstream finance. Stablecoins, digital asset investment products, blockchain-based payment systems, and tokenized assets are expanding the connection between traditional finance and the crypto economy. Restricting banking access while simultaneously building a formal regulatory framework could create an uneven environment in which crypto companies are expected to comply with financial rules but struggle to access the infrastructure necessary to operate.

Parliamentary inquiry seeks evidence from industry

The APPG’s inquiry builds on its 2022–23 investigation into the UK’s ambition to become a global cryptocurrency and fintech hub, which identified banking access as one of the sector’s most significant challenges. The new inquiry will revisit whether meaningful progress has been made and whether additional action is required.

The APPG is inviting written evidence from banks, payment providers, crypto companies, fintech firms, regulators, academics, legal professionals, consumer groups, and industry associations. It will also examine international approaches to crypto banking access to identify potential solutions.

The outcome could have significant implications for the UK crypto industry and potentially serve as a blueprint for addressing similar banking challenges in other jurisdictions. If legitimate digital asset firms continue to face difficulties accessing banking services, investment and innovation could increasingly shift toward jurisdictions offering clearer pathways into the traditional financial system. Finding the right balance between financial crime prevention and fair banking access will therefore be critical to the UK’s ambition to remain a competitive global crypto and digital asset hub.