Which UK Banks Are Crypto-Friendly?
Which UK Banks Are Crypto-Friendly?
Cryptocurrencies’ growth and popularity have raised many concerns due to their core features – decentralization and anonymity of crypto transactions. Therefore, not many banks today offer you debit or credit card payments, buying and selling cryptocurrency on cryptocurrency exchanges. Financial institutions are reluctant to offer crypto-friendly services to avoid exposing their clients and their business to a high risk of losing their funds. When it comes to the United Kingdom, you can find a crypto-friendly bank that suits your needs. We have prepared a crypto-friendly banks UK overview to see which these banks are. Before we tackle the overview, let’s see what crypto-friendly banks are and what differentiates them from other bank types.
Crypto-friendly banks UK vs. crypto banks
Their names are similar but still there are some nuances regarding their roles. Crypto banks are offering purely cryptocurrency-related services.
On the other hand, crypto-friendly banks cater primarily to traditional banking services. But in addition to the traditional services, they are also introducing crypto-related services and products.
The services offered by crypto friendly banks UK
The crypto friendly banks UK offer the following types of services.
- Buying and selling crypto
- Holding crypto
- Loans in cryptocurrencies
- Crypto as a payment method for bills
- Interest in crypto holdings
- Trading on margin using crypto
Crypto friendly banks UK overview – bitcoin friendly banks
Royal Bank of Scotland (RBS)
RBS introduced its crypto services in 2014 and, in 2018, created a blockchain platform for international payments. It also developed many blockchain-based fintech patents. This is one of the best options if you are searching for long-established banks that also cover some crypto-related services.
You can use your bank accounts to trade crypto and deposit and withdrawal from crypto exchanges. However, there is no guarantee you can operate on whatever crypto exchange. But with the most popular ones, there shouldn’t be any hassles.
Barclays
It’s one of the biggest investment banks and one of the first to introduce crypto-related services. Notably, Barkleys has been cooperating with crypto businesses since 2016. It constantly works on enhancing its operations and investing in several startups and fintech projects based on blockchain.
The fact that their partnership with Coinbase ended doesn’t have to worry you. As per many of their customers, most crypto exchanges’ withdrawal and depositing process goes without hiccups.
Standard Chartered Bank
It’s a British bank with a strong international presence all around the globe. When it comes to cryptocurrency friendliness, one thing’s for sure. You can withdraw and deposit funds on crypto trading and investing platforms. They are constantly working on improving their crypto services.
Nationwide Building Society
It’s the biggest construction society in the UK and has been working with cryptographic assets organizations since 2018. Nationwide Building Society offers a full scope of banking administrations, including business records and credits.
The society offers extraordinary opportunities for UK-based crypto organizations searching for traditional banking services coupled with the crypto sector.
TSB Bank
TSB included crypto services in 2018 and allows its clients to buy crypto, trade, and hold crypto assets on major training platforms with no issues. However, the bank imposes certain limits when it comes to large transactions. If you transfer a large amount, you will need to do it in several separate operations or contact the banks to assist you in transferring your funds.
What are challenger banks or neo-banks?
We cannot speak about crypto friendly banks in the UK without mentioning the emergence of so-called challenger banks. These came into existence starting in 2008, representing upheaval in the banking sector.
These banks are mostly only app-based and are crypto-friendly, with also traditional banking services available to their clients. Some of the most popular are Revolut, Monzo, Xace, Ourounda, Nuri, and many more. They aim to encompass all the services that don’t exist at the traditional banking high street facilities. The other name they are known for is neo-banks.
A transfer in fiat from/to a crypto exchange platform to a challenger bank account is no problem. Their users who have verified their identity are offered an annual ceiling in euros or other fiat money, beyond which the bank asks for proof of the origin of the funds.
They have their own platforms to buy cryptocurrencies hosting more than a million customers in Europe using the service to manage their daily budget.
Crypto friendly banks UK – Revolut as one of the best neo-banks in the UK.
Revolut is a very successful English neo-bank. It provides access to a current account and a payment card at no cost. In addition to this service, it has diversified its range with investment products. You can buy shares, commodities, or even crypto-currencies from its mobile application.
Revolut has won over 15 million customers across Europe in just a few years. In France, it can boast of having exceeded one million active users. It allows its customers to expose themselves to the volatility of cryptocurrencies from its application. That said, you won’t own your cryptocurrencies: they will have to stay in the app, nor can you transfer them to your friends on Revolut.
That said, it’s a small detail that does not change much for novices. You have to see Revolut as a solution to buy Bitcoin easily, all using the service to manage their daily budget.
While some neobanks are exclusively focused on cryptocurrencies, Revolut is a more traditional player. You can store fiat currencies (euros, etc.) and use them with the associated bank card.
Revolut distinguishes its freemium users from its paying customers in terms of fees. If you have the Revolut Premium or Metal plan, you will be charged a 1.50% fee for each purchase of Bitcoin (or any other cryptocurrency).
If you use the free account, you will have to pay a 2.50% fee for each transaction. Depending on the volume you want to achieve, you will have to think about one formula rather than another.
Crypto friendly banks UK – What about regulations?
Cryptocurrencies are regulated in the UK in a way they represent the property asset but not regular currency. Therefore, you can own or trade the crypto assets, but you will encounter limits if you wish to use it for payment since most high street shops do not accept cryptocurrency transactions. Regarding crypto exchanges, their business must comply with the regulations the Financial Conduct Authority sets.
These sets of regulations aim to prevent money laundering or any fraudulent operations. Any cryptocurrency trading platform these days must comply with these standards. That’s why one of the most popular platforms, Binance, has been banned from the UK market since they could not fully comply with the rules.
The banks that are not crypto friendly in the UK
While more and more banks are becoming crypto-friendly, many institutions remain adamantly opposed to sending (via wire transfer) and receiving amounts from cryptocurrency-related platforms and intermediaries.
Concretely, a simple transfer, or payment by card, to a platform like Binance, Coinbase, or Kraken can cost you dearly.
The penalties are sometimes severe: blocking the sending and receiving of sums or even total blocking of the customer account if a transaction of this type is clearly identified. Hence the interest in having several bank accounts in case your main bank blocks you.
Since we have reviewed the most prominent crypto friendly banks in the UK, let’s see some banks that are not crypto friendly in the UK. These are Lloyds Banking Group, Starling Bank, and HSBC.
So if you are into the crypto business, investing, or trading cryptos, these banks are to avoid. Lloyds Banking Group is strictly prohibiting transactions with crypto trading platforms. The other two have proclaimed themselves as crypto-friendly at some point, but the customers frequently report having problems with flagged transactions.
Can Bitcoin coexist with traditional banking
Bitcoin is not a problem for commercial banks. On the contrary, it should be seen as an opportunity.
The bitcoin, which is called not to replace but to coexist with traditional currencies, rather represents a danger for central banks. In the event of widespread usage of the bitcoin, we would pass from a model “In God we trust” slogan inscribed on the American dollars to a system based on “trust in cryptography,” which, moreover, does not generate any inflation.
Strategy to adopt Bitcoin investing and trading
Only invest what you are prepared to lose. That’s the most important principle to keep in mind at all times. It applies to cryptocurrencies as well as any other financial asset. Whatever the evolution of the price of this asset, you must always keep a cool head and never be overwhelmed by emotions.
To avoid getting carried away, you must always set rules: an objective to be achieved (which you must stick to) and protections in the event of a drop. You have to know how to set an investment plan to secure your profit step by step. Bitcoin will not rise to infinity, so you have to know how to set reasonable goals so as not to exit too late.
At the start of 2021, the American bank JP Morgan also advised its clients to invest 1% of their funds in Bitcoin. This is a way to not risk too much capital while having a certain exposure to crypto-currencies. With the price of the currency rising, this percentage may represent a larger percentage in the overall portfolio.
Should you focus on Bitcoin? Should you choose other cryptocurrencies?
If you just started and decided to buy Bitcoin a short time ago, it is better to focus on the most important cryptocurrencies. Bitcoin and Ether are the two most popular. They are also less volatile than others (although they are very volatile compared to more traditional financial assets).
In the world of cryptocurrencies, there are always fads. In 2017, there was the ICO (Initial Coin Offering) bubble. This way of raising funds disappeared in 2018, leaving many investors with significant losses. Since the end of 2020, decentralized finance (and DeFi tokens) have been immensely successful. Until when? Is the same for NFTs? No one knows.
If you are starting with cryptocurrencies, it is better to buy Bitcoin first. This is also what institutional investors do. However, you can afford to invest a small part of your crypto portfolio in (even) riskier projects. Adopting a shorter-term investment strategy will be necessary because risky projects may eventually disappear.
In May 2021, the cryptocurrency market experienced a terrible correction. Bitcoin fell more than 50% to fall below $30,000 (from its high of 63,000 a few weeks before). This is proof that you should only invest a limited amount. It is also proof that you have to be patient and see this as a long-term bet.
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