Starling, a digital bank based in the United Kingdom, is the latest financial institution to ban cryptocurrency-related transfers and activities for its cardholders.
Starling customers will no longer be able to buy cryptocurrencies such as Bitcoin (BTC) or receive incoming transfers from crypto exchanges or merchants.
The internet bank announced this in a statement to customers as well as on Twitter, citing the perceived high risks of trading cryptocurrencies.
Hello. We are always revisiting our position on financial crime. We consider crypto activity to be high risk. We have decided to ban all card payments to cryptocurrency merchants and introduce additional restrictions on outgoing and incoming transfers.
— Starling Bank (@StarlingBank) November 22, 2022
The bank also described cryptocurrencies as “high-risk and actively used for criminal purposes.”
A Starling spokesperson told Cointelegraph that the bank has had “various degrees” of restrictions on cryptocurrency-related transactions for some time. “We recently tightened restrictions on incoming and outgoing card and bank transfer transactions,” the spokesperson said, adding:
“The innovative technologies and mindset behind cryptocurrencies have great potential benefits, but right now they are high risk and actively used for criminal purposes, so we no longer support them.”
The bank’s action comes amid an ongoing industry scandal involving FTX, one of the world’s largest cryptocurrency exchanges, which allegedly misappropriated user funds with its subsidiary Alameda. The firm owes more than $3 billion to its top 50 creditors, according to FTX’s filing for bankruptcy, and the total number of creditors is reported to be over 1 million investors.
Some members of the crypto community believe that some restrictions on crypto activity by banks seem reasonable, but a complete ban is not the best solution.
“While blocking individual transactions that banks consider outright fraud is understandable, banning legitimate transactions that affect the entire industry is unacceptable,” SovrynBTC. argued on twitter on Thursday. The crypto enthusiast also asked why banks do not care about many other types of risky transactions of their clients, including stock trading or gambling.
Banks do not interfere in any other “risky” activities – they will gladly allow you to buy tobacco, alcohol or prescription drugs. Or let you trade stocks or gamble.
Where is the logic?
— Sovrin | DeFi for Bitcoin (@SovrynBTC) November 24, 2022
The latest restrictions are not the first time Starling has cracked down on cryptocurrency-related activity. The bank briefly suspended payments to crypto exchanges in May 2021 due to similar concerns, citing “a high level of suspicion of financial crime with payments to some crypto exchanges.” About a month later, Starling resumed cryptocurrency exchange operations.
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The lock comes weeks after Santander UK capped customer deposits on crypto exchanges to 1,000 British pounds ($1,196) per transaction and a total limit of 3,000 pounds ($3,588) per month.
A number of other UK banks have reportedly banned cryptocurrency-related transactions entirely. TSB banned its 5.4 million customers from buying Bitcoin last June. Other major lenders including Lloyds, NatWest and Virgin reportedly banned cryptocurrency purchases using credit cards in 2018.