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 like Bitcoin $16,559 or receive incoming transfers from crypto exchanges or merchants.
The online bank announced the news in a statement to customers as well as on Twitter, citing the perceived high risks of crypto trading.
Hey @StarlingBank i recieved a notification in app saying you no longer support crypto transactions? What happened guys I really loved banking with you.
— CryptoLetsGo (@CryptoLetsGo3) November 22, 2022
The bank also described cryptocurrencies as “high risk and heavily used for criminal purposes.”
A spokesperson for Starling told Cointelegraph 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 transactions by card and bank transfer,” the representative stated, adding:
“The innovative technology, and thinking, behind cryptocurrencies have great potential advantages. However, right now, they are high risk and heavily used for criminal purposes and, as such, we no longer support them.”
The bank’s measures come amid the ongoing industry scandal involving FTX, one of the world’s biggest crypto exchanges that allegedly misappropriated user funds with its sister firm Alameda. According to FTX’s bankruptcy filing, the firm owes more than $3 billion to its 50 biggest creditors, while the total amount of creditors reportedly numbers over 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, banning legitimate transactions involving an entire industry is unacceptable,” SovrynBTC argued in a tweet on Thursday. The crypto enthusiast also asked why banks do not care about many other types of risky transactions by their customers, including trading stocks or gambling.
The latest restrictions are not the first time Starling has cracked down on crypto-related activity. The bank briefly halted payments to crypto exchanges in May 2021 over similar concerns, citing “high levels of suspected financial crime with payments to some cryptocurrency exchanges.” Starling subsequently resumed crypto exchange operations about a month later.