A group of UK MPs have written to the heads of UK banks inquiring over their policy on providing banking services to cryptoasset companies, suggesting a failure to do so could be “one of the single biggest barriers to growth” for the industry.

In a letter Tuesday, the co-chairs of the crypto and digital assets all-party parliamentary group (APPG) asked the chief executives of major banks to provide information regarding their approach to providing banking services to businesses in the sector and whether it was likely to change once the UK’s new cryptoassets regulation comes into force.

The co-chairs of the APPG say in the letter that they have heard of “repeated instances” where crypto companies “struggled to open accounts with UK banks”, adding that they have also heard reports that several banks have introduced restrictions on crypto-related payments and transactions.

While acknowledging the legal and regulatory duties banks have to prevent financial crime, a common fear given the crypto sector’s historic links to criminal activity, the letter advocates for firms that have argued their risk profiles should be determined on a case-by-case basis rather than solely decided by the sector they are in.

The letter notes that Lucy Rigby, economic secretary to the treasury, echoed this sentiment earlier in the year, telling parliament that “Under the UK's new crypto regime, firms will need to be licensed by the FCA to provide relevant cryptoasset services, and the Government would not expect such licensed firms to be subject to restrictions by banking services providers simply because of the sector they belong to.”

The new cryptoasset regulation, the final details of which were released at the end of June, is significantly weaker than its initial proposal. Stablecoin providers, whose currencies are nominally pegged to a real-world asset, will only be required to hold reserves equal to one per cent of the assets they issue, half the initially proposed amount.

In addition, cryptoasset providers will be allowed to perform self-designed stress tests and determine their own level of capital risk. Banks in the UK are required to complete scenarios designed by the Bank of England instead.

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