UK banks block crypto payments amid

UK banks are blocking or delaying roughly 40% of payments to crypto exchanges, according to a January 2026 report titled "Locked Out" from the UK Cryptoasset Business Council. The friction has worsened over the prior year for 80% of exchanges surveyed, with none reporting improvement.

Major banks including Chase UK, Starling, TSB, Virgin Money, and Metro Bank maintain blanket bans on all transfers and card payments to crypto exchanges. This is regardless of an exchange's own compliance standing. The situation follows a 2025 survey where half of UK crypto and Web3 firms had been rejected for a business bank account or had one closed.

The compliance and economic conflict

Banks treat crypto accounts as compliance-heavy. They require sharper transaction monitoring, sanctions screening, and know-your-customer checks on downstream wallet holders. The transaction volumes involved are often beyond what standard correspondent banking infrastructure was designed for.

However, the issue is also one of cold economics for a lending bank. It is a matter of where the same risk and operations budget earns more. A high-compliance clearing account for crypto transactions earns only a thin fee. The money moves too fast to lend against. That fee is all the bank ever collects.

In contrast, a stable, low-compliance deposit sits still long enough to lend out. The lending margin on it is worth far more than the clearing fee, for far less compliance overhead. When the two types of account draw on the same risk and operations budget, the compliance-heavy account is bound to lose.

A proposed structural solution

The proposed fix must work on two fronts. First, it requires a banking relationship whose economics are aligned with clearing from the start. Second, it needs an account structure that lets a bank see and price the compliance work a client has already done.

This is also a custody decision. A crypto exchange or stablecoin platform's fiat operations, the accounts that receive and pay out traditional currency, need structural segregation. Named custody accounts, one per client rather than a pooled account reconciled by an internal ledger, make that segregation architectural instead of merely contractual.

Segregation lowers costs for both banks and crypto firms. Much of what makes a transaction expensive to screen is that it arrives from a pooled account the bank cannot see into. Similarly, what makes an application hard to underwrite is that same opacity. Named accounts turn an opaque flow into an attributable one. This is closer to what a bank's own compliance team wants to review. It is also closer to what an underwriting team needs to approve a new account rather than decline it by category. The data suggests many firms meeting compliance criteria are likely still not getting through the door.