JPMorgan’s UK bank, Chase UK, recently announced that it will be halting its customers’ ability to purchase cryptocurrencies starting next month. This move comes as British lenders are taking steps to prevent their networks from being used by criminals who exploit digital assets to target victims.
While some banks, such as HSBC and NatWest, have imposed restrictions on customers’ crypto purchases, outright bans on cryptocurrencies are relatively rare. Chase UK’s ban, which will take effect on October 16, is based on data showing the alarming rate of crypto scams and fraud in the UK, which includes fake investments and deceptive celebrity endorsements.
According to data from fraud reporting agency Action Fraud, losses due to crypto-related fraud have increased by more than 40% in the year leading up to March 2023, surpassing £300 million for the first time. One senior banker estimated that between 20 and 25% of transactions from their customers’ accounts to crypto firms were connected to fraudulent activities.
In response to the growing number of crypto scams targeting UK consumers, Chase UK has decided to prevent the purchase of crypto assets using its debit cards or by transferring money from a Chase account to a crypto site. It’s important to note that this ban is specific to Chase UK and not a group-wide policy by JPMorgan, although the bank had previously prohibited customers from purchasing cryptocurrencies with credit cards in 2018.
Chase UK has approximately 1.6 million customers and £15 billion in deposits, representing only a small portion of the UK retail market. Nevertheless, other lenders have also taken measures to limit how customers can purchase cryptocurrencies. In March, NatWest placed restrictions on transactions to exchanges to protect consumers from losing significant sums of money, and HSBC announced a ban on buying cryptocurrencies with credit cards a month earlier. TSB and Starling Bank have also implemented similar restrictions due to the high rate of fraud associated with crypto.
It is worth mentioning that cryptocurrencies like bitcoin and ether are largely unregulated in the UK, although regulators are currently reviewing how to best oversee this asset class. In an effort to combat misrepresentation, crypto firms operating in the UK will be required to adhere to new rules set by the Financial Conduct Authority starting from October 8, including a ban on “refer a friend” promotional campaigns.
While the banning of cryptocurrencies by Chase UK may not have a significant impact on the overall crypto market, it highlights the increasing concern among financial institutions regarding the risks associated with these digital assets. As regulators continue to explore ways to protect consumers and mitigate fraudulent activities, the future of cryptocurrencies in the UK remains uncertain.
