Home CryptocurrencyBitcoin British bank Starling bans purchases and deposits related to cryptocurrencies due to high risk

British bank Starling bans purchases and deposits related to cryptocurrencies due to high risk

by SuperiorInvest

Starling – a UK-based digital bank – is the latest financial institution to ban cryptocurrency transfers and activities from its cardholders.

Starling customers will no longer be able to purchase cryptocurrencies such as Bitcoin (BTC) or receive incoming transfers from crypto exchanges or merchants.

The online bank announced the news in a statement to customers as well as on Twitter, citing the perceived high risks of cryptocurrency trading.

The bank also described cryptocurrencies as “high risk and heavily exploited for criminal purposes”.

A spokesperson for Starling told Cointelegraph that the bank has had “varying degrees” of restrictions on cryptocurrency-related transactions for some time. “We have recently tightened restrictions on incoming and outgoing card and bank transfer transactions,” the representative said, adding:

​The innovative technology and thinking behind cryptocurrencies have great potential benefits, but are currently high-risk and heavily exploited for criminal purposes, and as such we no longer support them.

The bank’s actions come amid an ongoing industry scandal involving FTX, one of the world’s largest crypto exchanges, which allegedly embezzled user funds with sister company Alameda. According to FTX’s bankruptcy filing, the firm owes more than $3 billion on its top 50 lenders, with the total number of lenders reportedly numbering over 1 million investors.

Some members of the crypto community believe that some restrictions on crypto activities by banks seem reasonable, but a blanket ban is not the best solution.

“While it’s understandable to block individual transactions that banks believe are outright fraud, banning legitimate transactions spanning an entire industry is unacceptable,” SovrynBTC he argued on Thursday in a tweet. The cryptocurrency enthusiast also questioned why banks don’t take care of their customers’ many other types of risky transactions, including stock trading or gambling.

The latest restrictions are not the first time Starling has cracked down on cryptocurrency-related activities. Due to similar concerns, the bank briefly halted payments to crypto exchanges in May 2021, citing a “high level of suspicion of financial crime with payments to some cryptocurrency exchanges”. Starling followed has resumed crypto exchange operations about a month later.

Related: The UK has a new name for stablecoins and a new law to regulate cryptocurrencies

The block comes a few weeks after Santander UK limited customer deposits to crypto exchanges at 1,000 British pounds ($1,196 USD) per transaction and a total limit of 3,000 pounds ($3,588 USD) per month.

A number of other UK banks have reportedly banned transactions related to TSB Bank’s cryptocurrencies altogether banned its 5.4 million customers from buying bitcoins last June. Other major lenders, including Lloyds, NatWest and Virgin, reportedly forbidden cryptocurrency purchases using credit cards in 2018.

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