2-10-2023 (LONDON) A banking lawyer has warned that British banks could face scrutiny if they adopt a similar approach to JP Morgan’s decision to block cryptocurrency payments for its UK customers. William Garner, the head of financial services and funds at law firm Charles Russell Speechlys, called the move by consumer bank Chase a “brave call” and doubted that high street banks would follow suit.
JP Morgan’s decision, effective from October 16, entails rejecting all payments it deems related to crypto assets, such as bitcoin. This step goes beyond the current practice of other banks, which merely impose restrictions on crypto-related transactions. Chase cited the rising number of crypto scams targeting UK consumers as the reason behind its decision.
Garner raised concerns about banks having the authority to determine what their customers can or cannot do with their money. He questioned whether it should be within the bank’s purview to make such decisions, considering that financial services firms are obliged to act in the best interest of their customers. He suggested that blocking certain payments could be viewed as a measure to protect the banks themselves rather than their customers. Furthermore, Garner noted that a blanket ban fails to distinguish between individuals purchasing or using crypto through regulated businesses versus unregulated ones.
In contrast, several major UK banks and building societies already impose limitations on cryptocurrency spending to safeguard customers against scams. Lloyds Bank, HSBC, and Nationwide are among the high street lenders that do not permit customers to purchase crypto using credit cards. Others restrict the amount of money individuals can spend using debit cards, mobile banking, or in branches, while still allowing some degree of freedom for spending and investment. For instance, Nationwide has a daily limit of £5,000 for debit card payments towards crypto assets, while Santander sets a limit of £1,000 per payment to a crypto exchange. Both banks are continuously reviewing these limits. HSBC, on the other hand, imposes a monthly cap of £10,000 but allows customers to receive payments from crypto exchanges into their accounts.
Garner expressed skepticism about high street banks following JP Morgan’s lead, as it could be challenging to justify such a regulatory decision. He also highlighted that if the ban were limited to UK banks, it would reflect poorly on an international scale.
