Chase UK’s decision to ban crypto won’t stop fraud, according to the CEO of blockchain protection company CoinCover.
The digital bank from JPMorgan is one of the newest entrants into the UK banking market, buoyed by its success in the US, but it has also become one of the latest financial institutions to prevent its customers from sending money to crypto exchanges.
It’s a trend that started earlier in the year, when a number of the UK’s high-profile banks capped the amount that customers could spend on crypto. They included NatWest, Nationwide, HSBC and Santander. The banks themselves say it will help protect customers against crypto scams and risky investments, but critics argue that it’s only a bank’s duty to educate consumers against risk – and not to dictate what they spend money on.
Alessandro Hatami, Managing Director of strategic consultancy Pacemakers, told FinTech Magazine that it was “a disturbing and overzealous trend”, while Kraken’s Blair Halliday said there were more effective ways to protect consumers.
‘Surprising’ to see banks limiting crypto deposits
Now David Janczewski, CEO of blockchain protection company CoinCover, has lent his voice to the opposition after Chase UK became the latest bank to join the crypto boycott: “Our recent research highlights the issues some people have with cryptocurrencies and found that security risks are the second largest barrier to adoption behind volatility. Chase UK’s decision to blanket block crypto-related payments due to concerns about fraud and security is surprising.
“Whilst we respect the bank’s commitment to safeguarding its customers, there are other means to protect against scams and fraud. Instead of banning all crypto-related activity, which may ultimately cause customers to leave, it is possible to prevent theft and loss by introducing more robust safety measures, which can tackle these issues at source.”
Many observers have cited tighter regulation as a way to protect consumers, but the cogs of the regulatory machine rarely turn quickly. The industry could copy the approach taken by the gambling industry, which, despite its chequered history in protecting users, does still offer customers the option to bar themselves or set certain limits on their activity.
That approach requires a user to be cognizant of the risks they’re facing, and there has been much criticism of the way it’s applied in the gambling sector, but telling account holders that they can’t move money to crypto platforms at all risks alienating crypto enthusiasts and setting a dangerous precedent for the roles that banks play in society.
