Kraken decries crypto de-banking amid Metro Bank ban
12/20/2024 02:41
Metro is one of several U.K. lenders to impose a bar or limit on deposits into crypto exchanges. A Metro Bank spokesperson says the thrust is to curb fraud.
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Metro Bank customers are no longer allowed to deposit money into crypto exchanges, the bank’s website shows.
“From November 2024, outbound payments to known Crypto Exchanges will not be processed,” the website reads. “This covers all of our banking products and payment methods.”
The reason? Fraud, according to a bank spokesperson.
“Due to the high levels of fraud associated with paying money to crypto exchanges, in order to protect our customers, we restricted this type of transaction in 2024,” the spokesperson said in an email to Banking Dive. “However, customers can still receive money from crypto exchanges.”
According to crypto market researcher Chainalysis, at least $24.2 billion in fraud occurred in the crypto world in 2023. The number, though staggering, represents 0.34% of all on-chain transactions, Chainalysis found, and includes both funds stolen in crypto hacks and funds sent to addresses identified as illicit.
But, according to Kraken UK’s general manager, Bivu Das, Metro Bank’s blanket crypto ban is part of a broader trend to de-bank crypto, citing similar bans at other major U.K. banks, including Chase UK.
“I do recognize there are challenges and risks associated with the [crypto] sector,” but a one-size-fits-all approach is not appropriate, Das said.
Kraken is regulated in the U.K. by the Financial Conduct Authority, and “to the same extent that many banks or other financial institutions are today, there's a heavy burden of regulation and compliance that we adhere to to ensure we protect our customers.”
“Applying those restrictions without a nod to that is quite simply not right,” he said, “notwithstanding the fact that these restrictions are banks telling you what you can and can't do with your own money.”
The trend isn’t new, he said, but he expects it might grow as the crypto bull market continues.
“When more people want to engage with the sector, that's when we see even further restrictions coming in,” he said.
While some banks, like Metro Bank and Chase UK, impose blanket restrictions on sending money to crypto exchanges, NatWest limits how much money can be sent to crypto exchanges to £1,000 daily and £5,000 over 30 days.
“You can infer that this is banks either trying to protect themselves or just make it easy for themselves to not have to deal with customers [engaging] with crypto because they fear it and they don't understand it themselves,” Das said.
While no major bank in the U.S. has an outright ban on sending money to crypto exchanges, the idea that government regulators have prevented banks from engaging in crypto is popular throughout the industry.
It stands to reason: Last week, redacted letters from the Federal Deposit Insurance Corp. show the agency called for a “pause” on bank-crypto activity in 2022, appearing to support a long-held industry assumption that federal regulators acted to keep traditional financial institutions out of the nascent and often volatile industry.
After the letters were released, a spokesperson for the FDIC directed Banking Dive to concern the agency expressed in 2022.
“While the FDIC supports innovations that are safe and sound, in compliance with laws and regulations, and fair to consumers, the FDIC is concerned that crypto assets and crypto-related activities are rapidly evolving, and risks of this area are not well understood given the limited experience with these new activities,” the agency said at the time.