The UK Digital Asset License Doesn't Come With a Bank Account

Two parliamentarians sent six questions to the chief executives of every major British bank on 11 August. The banks are under no obligation to answer any of them.

That is not a cheap shot at the Crypto and Digital Assets All-Party Parliamentary Group. It is the structural problem the letter exposes.

Gurinder Singh Josan CBE MP and Lord Vaizey of Didcot, the group's co-chairs, have asked lenders to set out their policy toward crypto firms, whether they bank them, what transaction limits they apply, what drives those limits, whether FCA authorisation will change anything, and what government could do to help. Sensible questions.

But Parliament's own guidance is blunt about what an APPG is: an informal cross-party group with no official status within Parliament, and the House rules require groups to avoid presenting themselves in a way that invites confusion with select committees.

No power to send for persons and papers. No privilege attaching to the evidence. No ability to compel a chief executive to sit in a room and explain a fraud model. The output is a report and a recommendation. As of writing, no bank had responded publicly.

So the interesting question is not what the banks will say. It is what happens when they say nothing much, and the UK's flagship crypto regime opens its authorisation gateway anyway on 30 September.

The letter quotes the Economic Secretary to the Treasury telling Parliament that under the new regime, "the Government would not expect such licensed firms to be subject to restrictions by banking services providers simply because of the sector they belong to."

The assurance the APPG is leaning on was given to Parliament in March 2026, under a Prime Minister who has since resigned and a Chancellor who has since been replaced.

Burnham cleared his predecessor's allies out of government and has set out a different economic programme. A bank general counsel reading the letter in August 2026 is entitled to ask whether a March undertaking from a government that no longer exists still binds anyone.

It never bound anyone in the first place. "Would not expect" is a ministerial expectation, not a legal instrument. It creates no cause of action, no supervisory obligation, and no rule a bank can be sanctioned for breaching. HM Treasury said something similar in January 2026. The blocking continued.

This is the mechanic the coverage keeps skipping. The Money Laundering Regulations 2017 require a risk-based approach, and the FCA's published position is that the risk-based approach does not license banks to treat whole categories of customer generically.

There should be relatively few cases, it says, where a relationship must be declined solely because of AML requirements.

The same page contains the sentence that decides the outcome: the decision to accept or maintain a business relationship is ultimately a commercial one for the bank. There is no general right to a business bank account in English law.

The Payment Accounts Regulations 2015 confer access rights on consumers seeking basic bank accounts, not on companies seeking commercial banking.

A bank that declines to onboard a crypto exchange because it does not want the correspondent risk, the monitoring cost, or the reputational exposure is making a decision the regulator has expressly declined to second-guess.

The incentives run the same way. A bank that onboards a firm which later collapses inherits the remediation cost and the headlines. A bank that refuses inherits nothing.

Absent a rule changing that asymmetry, the letter is asking institutions to volunteer against their own interests.

Britain did legislate on debanking. The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 came into force on 28 April 2026.

New regulation 51B of the Payment Services Regulations 2017 requires 90 days' notice before terminating an indefinite-term framework contract, plus an explanation sufficiently detailed and specific for the user to understand why.

The instrument does reach refusals, which is worth stating because most commentary describes it purely as a termination measure.

Regulation 2(2) substitutes paragraph (4) of regulation 25 of the Payment Accounts Regulations 2015, headed "refusal of application," and inserts a new paragraph (5), so that any reason given must be sufficiently detailed and specific to enable the consumer to understand why, unless providing it would be unlawful, and the applicant must be told how to complain and of the right to go to the Financial Ombudsman.

Read the provision closely, though, and it speaks throughout of "the consumer." Regulation 25 governs designated credit institutions dealing with individuals seeking payment accounts with basic features.

It is the basic bank account regime. No exchange is a consumer, and none is applying for a basic bank account. Parliament created a duty to explain refusals and drew it so that it reaches no business in the sector the APPG is investigating.

The enhanced termination protections apply only to indefinite-term framework contracts entered into on or after 28 April 2026.

Here is where this stops being a grievance and becomes a design flaw. I flag what follows as analysis rather than established fact.

The FCA's gateway runs from 30 September 2026 to 28 February 2027, with the mandatory regime live on 25 October 2027. There is no automatic conversion from existing MLR registration. Every firm applies fresh, against threshold conditions covering financial resources, safeguarding, operational resilience and a credible wind-down plan.

Each of those runs through a bank. The FCA has confirmed in PS26/11 that the CASS 7 client money rules apply to money arising in connection with safeguarding client cryptoassets, and CASS 7 means segregated client accounts held at a bank.

Demonstrating prudential resources requires somewhere to hold them. A wind-down plan that cannot describe how customer money gets returned is not a wind-down plan.

A firm that cannot open a UK bank account may therefore struggle to assemble an application in time to catch the savings window, which turns banking refusal into something more than a growth barrier: not a delayed license, but a forced pause in trading. It is capable of operating as a de facto gatekeeper to the license itself.

Authorization is unlikely to fix this on its own.

A significant part of the current restrictions operates at the payment level rather than at the level of the regulated counterparty: the Financial Times reports limits on transfers to crypto exchanges at HSBC, NatWest, Monzo and Nationwide, while Starling and Chase UK have been reported as blocking such payments outright.

Banks have defended restrictions primarily by reference to fraud and consumer-protection risks, including the fact that cryptoasset losses are not protected by the Financial Services Compensation Scheme.

The UK Cryptoasset Business Council’s January 2026 survey of ten exchanges estimated that roughly 40% of transactions to crypto exchanges were blocked or delayed, with respondents reporting that FCA registration did not prevent payment restrictions.

That is an industry body’s own survey of its constituency and should be read as such. But the mechanism is credible: payment controls can identify transactions involving cryptoasset platforms without necessarily incorporating the recipient’s FCA regulatory status into the decision rule.

FSMA authorisation does not, by itself, require banks or payment systems to treat payments to an authorised crypto firm as unrestricted.

The evidence window closes on 31 August, after which the APPG reports to government. The FCA has said it will consult later this year on updates to the Financial Crime Guide covering the application of AML and KYC obligations to cryptoasset firms.

The question worth tracking is whether any regulator converts the government's stated expectation into something enforceable, whether through the Consumer Duty, supervisory guidance on category-level de-risking, or a rule requiring reasons for refusal as well as for termination.

Absent that, the UK will spend 2027 issuing licences that carry real obligations and no corresponding access, and firms will do the arithmetic about which jurisdiction actually wants them.

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