UK Banks Are Killing Bitcoin Startups

While Britain is said to be looking to turn the UK into a center for Bitcoin trade, Bitcoin exchanges and trading services are still struggling with the traditional banking industry.

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UK Banks Are Killing Bitcoin Startups

While Britain is said to be looking to turn the UK into a center for Bitcoin trade, Bitcoin exchanges and trading services are still struggling with the traditional banking industry.

Throughout the UK, merchants have been welcoming digital currencies with open arms. Since the beginning of 2014, online and brick-and-mortar businesses in various sectors from adult entertainment, food services, to gift vouchers, have started either considering, or accepting Bitcoin as a mean of payment.

Although a recent survey suggested that the British public has had mixed feelings regarding digital currencies, Bitcoin is making its way to the UK, progressively conquering the hearts of the public and the officials.

On August 6, Chancellor for the Treasury George Osborne, said he has instructed the government to explore the role of digital currencies in the financial system in order to make Britain the "global center of financial innovation.” Britain officials were said to be working on a regulatory framework in order to make cryptocurrencies a part of the country's strategy to boost innovation in the traditional finance sector.

But in practice, the reality is far different from the rather optimistic landscape that Chancellor Osborne had sketched. In an announcement made on August 18 entitled "Don’t let global organisations dominate the UK’s Bitcoin market – an open letter to all UK banks", UK-based Bitcoin startup MetaLair.org Ltd., shared its struggle for opening a simple bank account and explained how UK banks weren't keen in dealing with Bitcoin exchange businesses.

Without expressively citing any bank, MetaLair explained how after several months of discussing about their business project, the bank in question contacted them and rejected their application stating, "the AML team had refused" their application. The financial institution had checked their website and noticed it mentioned that MetaLair handled Bitcoin and cryptocurrencies, terms MetaLair was asked to justify.

The release stated:

"Sadly this is not an unusual state of affairs here in the UK. The very vast majority of businesses we’ve spoken to who handle Bitcoin and other cryptocurrencies have all been refused bank accounts."

Eventually, they contacted another bank, which did not even check their website and after two months, MetaLair had its bank account.

The announcement noted that the reluctance from UK banks was a concern for local startups and businesses, in light of recent announcements from Chancellor Osborne:

"By refusing to work alongside Bitcoin and other cryptocurrencies UK banks are stifling innovation in the UK, leaving the market open for other global organisations to move in and dominate the UK. A market the UK should be looking to grow as part of its financial services industry."

Thus, MetaLair is "reaching out to those who can affect change" in order to enlighten UK banks and financial institutions on the opportunities may possible by cryptocurrencies. 

In March, the UK financial regulation body, the Financial Conduct Authority (FCA) said it does not regulate digital currencies and has no future plans to do so, according to CoinSpectator. Because cryptocurrencies aren't legally authorized means of payment, banks can boldly refuse to support crypto-related accounts regarding the high financial-related crimes risks. 

Image via London Snap

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