UK Lawmakers Press Banks Over Crypto Debanking Before New Rules

• UK lawmakers have asked major banks to explain how they treat crypto businesses and transactions.
• The inquiry is testing whether banking restrictions will survive the UK’s new crypto regime.
• Firms warn that losing basic banking access can undermine the value of becoming FCA-authorised.
• The APPG will accept evidence until August 31 before preparing recommendations.

The Crypto and Digital Assets All-Party Parliamentary Group has written to bank leaders seeking details about their policies toward crypto firms and payments, warning that excessive restrictions risk pushing legitimate businesses, investment and financial innovation away from Britain.

Banks are being asked whether their crypto policies will change

The latest intervention forms part of a parliamentary inquiry launched in July into access to banking services for Britain’s crypto and digital asset industry.

According to the Financial Times, the APPG’s co-chairs, Lord Ed Vaizey and Labour MP Gurinder Singh Josan, have asked major banks to explain how they assess crypto businesses and transactions and whether those policies are likely to change once the country’s incoming regulatory system takes effect.

The question goes beyond individual account closures.

The inquiry is examining two separate forms of banking friction: whether legitimate crypto companies can obtain and maintain corporate bank accounts, and whether banks are placing disproportionate limits on payments made by consumers to crypto platforms. It will also consider access to related services such as insurance and the effect banking restrictions have on competition, investment and Britain’s international competitiveness.

Banks have legitimate risk considerations. Crypto transactions can expose institutions and customers to fraud, money laundering and assets with sharp price volatility, while cryptocurrency losses generally fall outside Financial Services Compensation Scheme protection. Several UK banks, including HSBC, NatWest and Monzo, have consequently imposed various limits or restrictions on crypto-related transactions.

The parliamentary challenge is whether broad restrictions remain proportionate when the counterparty is a regulated business rather than an unknown offshore platform.

The new FCA regime changes the debanking argument

That question has become more urgent because the UK has now completed much of the regulatory architecture banks previously said was missing.

The FCA published its final crypto rules on June 30. Firms will be able to apply for authorisation between September 30, 2026 and February 28, 2027, with the mandatory regime taking effect on October 25, 2027.

Once authorised, crypto companies will face requirements covering capital, governance, operational resilience, consumer protection and financial crime controls. The framework brings regulated crypto activity into the

Financial Services and Markets Act perimeter rather than leaving much of the sector operating under the narrower anti-money laundering registration regime used previously.

That creates a potential policy mismatch.

A company could spend substantial resources satisfying FCA requirements and securing permission to operate in Britain, yet still struggle to obtain the current account, payment rails or other banking infrastructure needed to conduct ordinary business.

For lawmakers, that raises a practical question: what is the economic value of creating a regulated crypto sector if regulated firms cannot reliably access the regulated banking system?

Where the banking dispute now stands

Why debanking can matter more than the crypto licence itself

Access to a bank account sounds operational, but for a crypto company it affects almost every part of the business.

Payroll, tax payments, supplier invoices and customer fiat deposits all depend on banking infrastructure. Exchanges additionally need reliable payment rails so customers can move pounds between bank accounts and trading platforms.

When those connections are restricted, firms can seek banking relationships overseas or route activity through additional payment intermediaries. That adds cost and complexity, and it can weaken the UK’s ability to capture the employment and investment associated with companies it is simultaneously trying to regulate domestically.

The APPG therefore is not arguing that banks should accept every crypto business. Its inquiry asks whether legitimate firms are facing unnecessary barriers and whether current policies appropriately distinguish between regulated businesses and higher-risk counterparties.

That distinction also protects banks’ ability to refuse customers where financial-crime or commercial risks are genuinely unacceptable. FCA supervision of a crypto company does not remove a bank’s own anti-money laundering obligations or force it to establish a relationship.

Banks have their own regulatory scars

There is another reason banks may be reluctant to loosen controls quickly.

UK regulators have imposed substantial penalties on banks for failures in financial-crime controls. The FCA fined Monzo £21.1 million in 2025 over weaknesses in its financial-crime systems and Barclays £42 million in separate cases involving inadequate handling of financial-crime risks.

For a bank, the economics are therefore asymmetric. Turning away a prospective crypto customer can mean losing revenue. Accepting a customer whose activity later creates serious compliance failures can produce regulatory penalties and reputational damage.

That helps explain why regulatory clarity for crypto firms does not automatically translate into immediate banking access.

The more realistic outcome may be a shift from sector-wide exclusions toward granular risk assessment. A bank could differentiate an FCA-authorised UK exchange with audited controls from an offshore platform operating without comparable supervision, rather than categorising both simply as “crypto.”

The inquiry puts the October 2027 regime under an early stress test

The APPG is accepting evidence from banking, payments, fintech and digital asset companies until August 31, after which it plans to publish findings and recommendations for government.

The timing means the banking question will be examined before crypto companies begin submitting formal FCA applications at the end of September.

That sequence could prove useful. Firms preparing for authorisation will soon know the capital, governance and compliance standards required to remain in Britain, while lawmakers will have evidence on whether meeting those standards is likely to improve their access to essential financial infrastructure.

The next point to watch is therefore not whether Parliament orders banks to serve crypto companies. The APPG does not have that power. It is whether banks indicate that FCA authorisation will materially change their risk assessments. If regulated status makes little difference to access, policymakers will face a harder question before October 2027: whether Britain can operate a competitive regulated crypto market while its banking system continues treating much of that same industry as commercially unacceptable.