British banks could face criticism if they follow in the footsteps of JP Morgan's Chase, which moved to block cryptocurrency payments for its UK customers, a banking lawyer said.
The outright ban by consumer bank Chase was a โbrave callโ that is unlikely to resonate with mainstream banks, said William Garner, head of financial services and funds at law firm Charles Russell Speechlys.
The move, which will see the bank reject all payments it believes are related to crypto assets, such as bitcoin, starting October 16, marks a step forward from other banks, which currently only restrict cryptocurrency-related transactions.
Chase said it made the decision after seeing an increase in the number of crypto scams targeting UK consumers.
There is a small hurdle to overcome if a bank is given the power to decide what its customers can and cannot spend their own money on.
William Garner, partner at Charles Russell Speechlys
Garner told the PA news agency: โIn regulatory terms, my question is: should it really be up to a bank to determine what its customers can or cannot do or invest in?โ
"There is a small hurdle to overcome if a bank is given the power to decide what its customers can and cannot spend their own money on."
He said all financial services companies are obliged to act in the best interests of their customers, but suggested a โcynic might sayโ that blocking certain payments is designed to protect the banks themselves rather than their customers.
The lawyer also noted that a blanket ban makes no distinction between people who purchase or use cryptocurrency through a regulated company and an unregulated company.
Meanwhile, some of the UK's largest banks and building societies say they are limiting cryptocurrency spending to protect customers from scams.
lloyds bank, HSBC and On a national scale are among the major lenders that do not allow customers to purchase cryptocurrency with their credit card.
Others limit the amount people can spend using their debit card or through mobile and in-branch banking, with the intention of continuing to give consumers some freedom to spend and invest.
If it's still just UK banks doing this, it won't look good internationally.
William Garner, partner at Charles Russell Speechlys
Nationwide has a daily limit for credit card payments to cryptoassets of ยฃ5,000 per day, while Santander is limited to ยฃ1,000 per payment to a crypto exchange.
Both banks keep the limits under review.
HSBC has a limit of ยฃ10,000 a month and customers can still receive payments from crypto exchanges into their accounts.
Garner said big banks are unlikely to follow in Chase's footsteps because it could be a difficult regulatory decision to justify.
"If it's still just UK banks doing this, it's not going to look good internationally," he added.
