Crypto holders are being “debanked” in the UK, with both high-street and challenger banks imposing strict limits on or even blocking cryptoasset platforms, despite the UK Government’s ambition to make the country a global destination for digital assets.

Surveying ten of the largest centralised cryptoasset exchanges (CEXs), the UK Cryptoasset Business Council’s Locked Out study found a “steadily worsening trend” of banks and payment providers taking a blanket approach to crypto, with one unnamed exchange reportedly seeing close to £1 billion in declined transactions.

Polling some of the world’s best-known exchanges, including Coinbase, Kraken, Wirex, Bitpanda, and Zumo, the study estimates that 40% of all transactions to cryptoasset exchanges are either blocked or delayed in the UK.

Eighty per cent of exchanges reported a noticeable increase in the number of customers experiencing these problems in the last year, while all (100%) complained that banks routinely fail to explain or resolve issues when they arise, leaving both crypto firms and their customers in the dark. 

Virgin Money, Metro Bank, Starling, TSB and Chase UK were singled out as the most difficult partners for crypto exchanges, thanks to their near blanket bans on transfers and severe caps on card payments.

Even digital-first challenger banks Revolut and Monzo, described as the “primary on-ramp” for crypto holders, were found to have significant frictions, such as 30-day transfer limits.

“Blanket restrictions from the bank are designed to constrain the growth of the crypto industry,” according to one exchange cited in the report.

“No consideration of our regulatory status, actual fraud levels or genuine risks has been taken into account. There is no willingness from most banks to even engage in good-faith conversations.”

The study reveals an emerging industry at odds with the traditional financial sector, with 70% of CEXs describing the banking environment as becoming more hostile.

As a result, most of these exchanges (70%) confirmed a reduced appetite to invest, scale and hire in the UK, with the report suggesting that several were looking to prioritise other markets for growth.

That’s bad news for the Chancellor, who last month touted the UK as a financial hub of the digital age, and said that the government was committed to providing “clear rules of the road” for digital assets in an effort to promote investment and create high-skilled jobs.

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The government has made its position clear, with the Financial Conduct Authority soon to be handed more power over the crypto market to bolster consumer confidence, pull more providers into regulatory oversight, and keep pace with competitors across the EU and Asia.

But meeting that goal, the Cryptoasset Business Council argues, will require further policy overhaul and more industry engagement.

As a baseline, the report recommends that the FCA force banks to adopt robust, risk‑based frameworks for dealing with crypto exchanges, stripping out “unnecessary frictions”, and set clear expectations for how banks should handle crypto payments. 

“Without action, digital asset firms are left navigating a regulatory vacuum in which access to basic banking services remains uncertain,” the paper concludes.