On Tuesday, the bank bosses in the United Kingdom informed the lawmakers that they are blocking customers’ access to crypto assets due to concerns over fraud and volatility.
The bank executives flagged social media and technology as a significant source of fraud but told the Treasury Select Committee that the new regulations could boost confidence.
Alison Rose, Chief Executive Officer of Natwest Group, told the House of Commons that they had taken a hard stance as a bank on crypto. She also revealed that the bank is blocking retail and wealth customers from transferring into crypto assets due to the issues of volatility and stability.
We have taken a pretty hard line as a bank on crypto. We’re blocking retail and wealth customers from transferring into crypto assets because of the platform’s volatility and stability.
Rose said that the banks look at crypto through a fraud perspective and realize that this might be frustrating to customers as they might want to invest. In her words:
We look at it through a fraud perspective. We know that can cause frustration for customers because they may want to invest – it’s their money – but if we’re evidencing significant fraud, we block them.
Rose said that the banks need to stop the frauds at the root cause, citing statistics showing that, for 60% of customers who were victims, the fraud originated on social media or technology platforms.
Apart from Rose, other executives questioned by the committee were also skeptical about crypto but saw potential in new regulation proposed for the sector by the Treasury last week.
Charlie Nunn, CEO of the Lloyds Bank said that they are very supportive of the regulation and regulators authorized to deal with crypto assets. However, the bank’s primary focus lays with the customers and their safety.
I don’t think Lloyds Banking Group will want to promote cryptocurrencies, but we want to ensure that, if our customers choose to put money into cryptocurrencies, it’s as safe as can be.
The bank executives appeared more skeptical about the potential benefits of a central bank digital currency (CBDC) the day after the Treasury and Bank of England said a digital pound was likely to be needed and with more details set to be published imminently.
Given the increasing rates of fraud and scams in the UK, it is no surprise that the banks are willing to maintain a cautious approach. As per a joint investigation by the Bureau of Investigative Journalism and the Observer, the country has become a hub for crypto and forex scams. The investigation revealed that at least 168 companies had been accused of running fraudulent crypto or foreign exchange (forex) scams in the UK. The actual number is believed to be much higher.