Starling – a digital bank based in the United Kingdom – is the latest financial institution to ban crypto-related transfers and activities for its cardholders.
Starling customers will no longer be able to purchase cryptocurrencies such as Bitcoin (BTC) or receive inbound transfers from crypto exchanges or merchants.
The online bank announced the news in a statement to customers and on Twitter, citing the perceived high risks of crypto trading.
Hi there. We are always reviewing our stance on financial crime. We consider crypto activity to be high risk. We have made the decision to prevent all card payments to crypto sellers and to introduce further restrictions on outgoing and incoming transfers.
— Starlingbank (@StarlingBank) November 22, 2022
The bank also described cryptocurrencies as “high risk and heavily used for criminal purposes”.
A spokesperson for Starling told TSTIME that the bank has had restrictions of “varying degrees” on transactions related to cryptocurrency for some time. “We recently tightened restrictions on inbound and outbound card and bank transfer transactions,” the representative said, adding:
“The innovative technology and thinking behind cryptocurrencies have great potential benefits, but right now they are highly risky and heavily used for criminal purposes, which is why we no longer support them.”
The bank’s moves come amid the ongoing industry scandal involving FTX, one of the world’s largest crypto exchanges that allegedly embezzled user funds with its sister company Alameda. According to FTX’s bankruptcy filing, the company owes more than $3 billion to its 50 largest creditors, while the total number of creditors reportedly exceeds 1 million investors.
Some members of the crypto community believe that some restrictions on crypto activity by banks seem reasonable, but a blanket ban is not the best solution.
“While it is understandable to block individual transactions that banks believe are outright fraud, it is unacceptable to ban legitimate transactions involving an entire industry,” SovrynBTC said. argued in a tweet on Thursday. The crypto enthusiast also asked why banks don’t care about many other types of high-risk transactions by their customers, including stock trading or gambling.
Banks don’t get involved in other ‘risky’ activities – they are happy to let you buy tobacco, alcohol or medicines. Or let you trade in stocks or gamble.
Where’s the logic?
— Sovryn | DeFi for Bitcoin (@SovrynBTC) November 24, 2022
The latest restrictions aren’t the first time Starling has cracked down on crypto-related activity. The bank briefly suspended payments to crypto exchanges in May 2021 over similar concerns, citing “high levels of suspected financial crime involving payments to some cryptocurrency exchanges”. Starling then resumed crypto exchange operations about a month later.
Related: The UK has a new name for stablecoins and a new bill to regulate crypto
The block comes a few weeks after Santander UK capped customer deposits on crypto exchanges to 1,000 pounds ($1,196) per transaction and a total limit of 3,000 pounds ($3,588) per month.
A number of other UK banks have reportedly completely banned crypto-related transactions. TSB Bank banned its 5.4 million customers from buying Bitcoin in June last year. Other major lenders, including Lloyds, NatWest, and Virgin, reportedly banned cryptocurrency purchases using credit cards in 2018.