Publications featured in include: The Daily Telegraph
Clients have recently found that UK banks have started to insist on proof that tax has been paid before accepting large deposits made from cryptocurrency trading. Banks do not require proof that tax has been made on other types of deposit.
Cryptocurrencies have attracted negative publicity for their associations with money laundering. Dealing with cryptocurrencies therefore increases the administrative burden on the banks to ensure transactions are legitimate. Some UK banks have decided to reduce their potential legal and reputational exposure by undertaking much more rigorous due diligence checks on any transactions related to cryptocurrency.
HSBC said it would restrict the processing of transfers from digital wallets to HSBC. Other banks have said they will restrict the usage of credit cards to buy and sell cryptocurrency.
Clive Gawthorpe, Partner in our Manchester office says: “It is highly unusual for banks to demand proof that tax has been paid before accepting a deposit.”
“To introduce this requirement specifically for cryptocurrencies shows how cautious UK banks are about cryptos. Some UK banks have decided that the high risk of reputational damage posed by cryptocurrencies is simply not worth it and are limiting their exposure.”