Financial institutions in the United Kingdom are moving to reduce the ability of retail customers to purchase digital currencies using their credit cards.
The latest banks to join the bandwagon are HSBC Holdings and Nationwide Building Society, as they cite large collapses in the digital currency sector as influencing their decision. A Bloomberg report disclosed that both institutions would be focused on clamping down on digital currency purchases via credit cards.
The report revealed that both banks had canceled the functionality for their customers, with Nationwide imposing a $5,965 daily limit on digital currency purchases made using the bank’s debit card. HSBC’s ban came in February, with the bank stating in an email that the move was “because of the possible risk to customers.”
“There are certain risks with purchasing cryptocurrency, as highlighted by the Financial Conduct Authority (FCA). We’ve set up these restrictions to help protect you and to try and keep your money safe,” Nationwide’s statement to customers read.
Industry collapses like Terra and FTX forced the FCA to issue a series of strongly worded warnings to consumers over investing in digital currencies. With FTX’s implosions costing victims losses exceeding $5 billion and the threat of contagion to the broader financial sector, U.K.’s financial watchdog has taken an offensive stance against digital currency service providers.
“There are no consumer protections for those who buy any cryptoassets and NFTs, and they are not FSCS protected. As a result, if you buy cryptoassets you should be prepared to lose all the money you invest,” warned the FCA last November.
HSBC and Nationwide are not the only banks with restrictions against digital currency purchases in the U.K., as Santander, Lloyds Bank, and Natwest Group have previously made similar moves. However, most of the restrictions are targeted against Binance, a digital currency exchange that the FCA says is not authorized to operate in the country.
FCA’s holy crusade against digital currencies
To clamp down on illegal digital currency activity, the FCA has begun a nationwide crackdown starting with the launch of a rule that could see executives go to jail for failing to meet the regulator’s advertisement requirement.
“Cryptoasset businesses marketing to U.K. consumers, including firms based overseas, must get ready for this regime,” the FCA said.
Last month, the regulator beamed its searchlight on the unauthorized activities by Bitcoin ATM service providers, urging them to be registered or face enforcement action. Other regulators like the Advertising Standards Authority (ASA) and HM Treasury are pulling their own weight in policing the growing sector.
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