Despite being the fifth largest economy in the world, the United Kingdom has a relatively small BTC/GBP trading volume ratio. Banks refusal to deal with Bitcoin companies is at the heart of the problem.
BTC/GBP trading pair
At first glance, the BTC/GBP trading pair would seem to be doing very well - it’s the sixth largest trading pair, accounting for 0.21% of Bitcoin’s total trading volume, 2,636.83 BTC or US$1,178,280.73, surpassed only by the BTC/CNY, JPY, USD, EUR, and RUB trading pairs. However, given that, according to a report by CoinDesk, 32.99% of Bitcoin users are based in Europe, a large portion of which are presumably based in the financial hub of London in the United Kingdom, this seems like a rather unsubstantial sum.
Bitcoin companies on banks’ blacklist
The reasoning behind this is not immediately obvious. However, if you do some further digging in the British Bitcoin space, you will discover what is at the heart of the problem.
Banks in Britain, for one reason or another refuse to allow any and all Bitcoin-related companies to bank with them, going so far as to place them on a blacklist, so that, across the board, UK-based Bitcoin companies are being forced to bank abroad or severely limit functionality in the UK.
Currently, in order to deposit money into an account through your bank on a Bitcoin wallet provider, you need to; send a confirmation payment to the provider’s bank, most likely based in Eastern Europe, then your actual payment via SWIFT, which has a £10-£25 fixed fee associated with every transaction, on top of the fees associated with sending transactions from your bank. Your funds are then converted into euros, which in turn has associated conversion fees, and then stored in the provider’s Eastern European bank. And that’s just the depositing!
When you then want to withdraw, your funds are converted back into pounds, meaning more fees, before being sent via SEPA payment to your bank account in the UK, which too has a fixed fee of £10-£25!
Government is changing its stance
Cointelegraph spoke to Shawn O’Connor, advisor to Kraken Digital Asset Exchange, about why British banks refuse to allow Bitcoin companies to bank with them. He said:
“Ask the banks in London who control the system why they don't want any bitcoin related business. It's a mystery to the bitcoin companies just trying to help British banks by paying fees and bringing them business. There's a mandate from the British government for the UK system to open up more this year to challenger banks and so on.”
If David Cameron is to be believed, change should hopefully be on the way in the coming years. Last year, while on his trip to South-East Asia, the British Prime Minister said:
“This government wants the UK to be the leading FinTech centre in the world.”
Cointelegraph also reached out to Coinbase to ask for their view on the situation, but they didn’t have anything to comment.