HSBC and Nationwide Building Society have become the latest major banks in the United Kingdom to impose a ban on their customers’ crypto purchases, according to Bloomberg.
The move follows a notice from British regulator Financial Conduct Authority (FCA), citing crypto as a high-risk investment.
HSBC, Nationwide Crypto Ban In Line With FCA Rules
According to the report, HSBC restricted consumers from making crypto purchases using their credit cards last month. The bank said the decision was made owing to an apparent financial risk to clients.
Meanwhile, Nationwide reportedly issued an email to its customers on Thursday informing them of crypto purchasing limits:
“We will not allow payments to crypto exchanges using a Nationwide credit card […] Neither you nor any additional card older will be able to use a Nationwide credit card to purchase cryptocurrency.”
Is Crypto A High-Risk Investment?
The cryptocurrency market is highly volatile, with prices fluctuating rapidly and frequently. This volatility can result in significant gains or losses for investors, depending on their timing and market knowledge.
The lack of regulation in the crypto industry can also make it a breeding ground for scams and other illegal activities.
Many cryptocurrencies have been associated with criminal activities such as money laundering, drug trafficking, and terrorism financing.
HSBC. Image: PYMNTS
The security of cryptocurrency exchanges and wallets is a significant concern. Cyberattacks, hacking, and theft are common in the cryptocurrency industry, and investors may lose their funds if their wallets or exchanges are compromised.
In addition, the adoption and use of crypto are still limited, which means that their value is often driven by speculation rather than actual usage.
The lack of widespread acceptance and adoption of crypto as a legitimate form of payment makes their value unstable and unpredictable.
Attitude Towards Crypto
The views of banks towards cryptocurrencies are mixed. Some banks see cryptocurrencies as a potential threat to their business model, as they could undermine the traditional financial system and compete with banks’ services.
Other banks are exploring opportunities to integrate cryptocurrencies into their business operations or offer cryptocurrency-related products and services to their clients.
Crypto total market cap at $991 billion on the daily chart | Chart: TradingView.com
An increasing number of British institutions are restricting crypto purchases. Starling Bank and Santander UK put similar limitations on fund transfers to crypto exchanges in November 2022.
Overall, the attitudes of banks towards cryptocurrencies are evolving as the technology and market continue to develop.
While some banks remain cautious and skeptical, others are exploring opportunities to leverage cryptocurrencies and blockchain technology to improve their business operations and provide new services to their customers.
Despite the fact that HSBC has adopted a crypto-averse posture with regard to whether or not consumers are permitted to purchase cryptocurrencies, the financial institution has just lately submitted trademark applications for a wide variety of digital currency and metaverse goods. Moreover, HSBC is now a part of the metaverse.
-Featured image from The Sportster