As covered in Proactive earlier this week, Banco Santander (LSE:BNC), one of the largest banks operating in the UK, is set to block all UK customers from sending real-time payments to cryptocurrency exchanges as part of measures to protect customers from scams.
To what extent Santander was willing to implement the ban, was less clear.
While many crypto exchanges remain highly unregulated and headquartered in dubious offshore locations (FTX in the Bahamas, anyone?), not all have followed suit.
Bitstamp, CoinJar, even the Winklevoss Twins-owned Gemini, are all registered with the Financial Conduct Authority (FCA), and while this does not bring them in line with the Financial Services Compensation Scheme, they at least show a willingness to comply with anti-money laundering and know-your-customer regulations.
Call them semi-regulated. Evidently, that’s not enough for Santander.
Upon asking for clarity, a spokesperson for Santander told Proactive: “The proposed restrictions impact all cryptocurrency exchanges - we are taking this approach because protecting customers from cryptocurrency scams is a top priority, and we want to prevent funds from getting into the hands of criminals.
“We believe it’s in the best interest of our customers to introduce these limitations at this time.”
This is a surprising stance, not least for the FCA-registered exchanges.
One such exchange is CoinJar, whose co-founder and chief executive officer Asher Tan called Santander’s stance an “unfortunate thing to hear”.
“Obviously as an FCA-registered exchange operator, that's not the sort of relationship we want to have with the rest of the financial system,” said Tan.
While Tan acknowledged that Santander has a responsibility to vulnerable customers, particularly given the increasing amount of crypto-related scams being filed with the FCA, Santander’s approach is particularly hardline.
Santander said: “Keeping our customers safe from cryptocurrency scams is a top priority, so we have decided to limit the amount of money customers can pay through online and mobile banking from their Santander accounts into cryptocurrency exchanges from 15 November.
“We intend to further protect customers by blocking all Faster Payments we identify to cryptocurrency exchanges from Santander accounts – this will be implemented during the course of 2023.”
Hardline or not, Santander is probably feeling vindicated with its decision given the phenomenal collapse of FTX this week.
Once the world’s second-largest cryptocurrency exchange, FTX today filed for bankruptcy protection in the US amid accusations of criminal mishandling of customer funds.
FTX founder Sam Bankman-Fried stepped down as chief executive officer, as US regulators have commenced investigations into the FTX.US subsidiary.