Why Are UK Banks Blocking or Delaying 40% of Crypto Payments?

A growing number of U.K. banks are blocking or slowing payments to cryptocurrency exchanges, with nearly 40% of customer transfers being obstructed, according to a new report from the UK Cryptoasset Business Council.

The findings highlight mounting tensions between traditional financial institutions and digital asset firms, raising concerns about competition, consumer protection, and the country’s ambitions to become a crypto hub.

Exchanges Report Rising Friction and Business Impact

The survey, which included ten major centralized exchanges such as Coinbase, Kraken, OKX, Gemini and Bitpanda, found widespread disruption across bank transfers and card payments. One large exchange reported nearly £1 billion in rejected payments over the past year in the U.K. alone.

Around 80% of respondents said payment issues had worsened significantly in the past 12 months, while 70% described the banking climate as increasingly “hostile.” Exchanges scored the U.K. 7.9 out of 10 in terms of difficulty accessing banking services, placing it among the toughest major markets in which to operate.

“This remains the single biggest barrier to scaling or launching new crypto products in the U.K.,” one respondent said, noting that firms have begun prioritizing expansion in other jurisdictions instead.

Blanket Restrictions and Opaque Policies

Exchanges reported that banks rarely provide explanations when blocking payments, even for firms fully registered with the Financial Conduct Authority. The report identified several high-street institutions as particularly restrictive, including Virgin Money, Metro Bank, Starling Bank, TSB, and Chase UK, all of which impose outright blocks on crypto-related transfers.

Larger incumbents such as Barclays and HSBC UK have introduced strict caps, limiting payments to £2,500 per transaction and £10,000 over 30 days, regardless of customer profile or risk assessment.

These broad-based restrictions persist despite the ongoing rollout of the Financial Services and Markets Act 2000 (FSMA) crypto framework, which aims to formalize digital asset regulation.

Legal Concerns: Are Banks Overstepping?

The UK Cryptoasset Business Council warned that current debanking practices may violate several existing regulations, including:

• Payment Services Regulations 2017: requiring case-by-case justification for payment blocks,
• The FCA’s Consumer Duty: mandating firms prevent foreseeable harm to customers, and
• The Competition Act 1998 prohibits anti-competitive behavior affecting market access.

The council argues that blanket bans applied to compliant, FCA-registered exchanges could restrict competition and limit consumer choice.

Industry Calls for Immediate FCA Guidance

The group is not seeking new laws but rather stricter enforcement of existing obligations. It is urging regulators to:

• Direct banks to adopt risk-based, individualized assessments,
• Require institutions to differentiate between regulated exchanges instead of applying sector-wide limits,
• Establish a formal forum for banks, regulators, and exchanges to share fraud data, and
• Ease unnecessary frictions for FCA-registered firms.

The council also encouraged a more nuanced understanding of retail user risk, rather than treating all crypto customers as vulnerable.

Regulatory Framework Still Taking Shape

The U.K.’s comprehensive cryptoasset regime under the FSMA is moving forward after HM Treasury submitted key regulations to Parliament in December 2025. The FCA is now consulting on the final rules, with the new authorization system expected to fully take effect in October 2027.

Until then, industry participants warn that continued “debanking” could undermine the U.K.’s stated ambition to become a global center for digital assets, unless regulators step in to clarify expectations and hold banks accountable for disproportionate restrictions.