The Royal Bank of Scotland has informed Gibraltar International Bank that it will no longer process its transactions if they are connected with cryptocurrency firms, only a few days after Gibraltar began offering regulatory licences to blockchain firms, according to a local news outlet.
GIB doesn’t handle cryptocurrency itself, but it has been accepting blockchain firms as clients since October, according to the Gibraltar Broadcasting Corporation.
The rejection is not particularly surprising. Back in December, RBS chairman Sir Howard Davies said to Bloomberg TV that Bitcoin seems to him to be a “frothy investment bubble”, adding: ““Put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here’ – I think that’s probably what’s needed.”
He has warned American exchanges not to trade using Bitcoin, and said that central banks are “very anxious” about the subject, but don’t want to be too overt in their criticism for fear of being branded Luddites. He advised the Bank of England, the US Federal Reserve, the Securities and Exchange Commission, and the European Central Bank to come together to warn people not to invest, according to The Guardian.
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UK blockchain firms have been searching for more welcoming climes for while now because British banks are refusing to open accounts for their businesses, according to a report in the Financial Times. Iqbal Gandham, head of eToro UK, said: “The moment you mention crypto to a bank, it’s like you are a drug dealer.”
Not only this – the British government recently requested that the agency responsible for domestic security look into cryptocurrency, to “probe the risks associated with Bitcoin”.
The FCA has expressed worry about this collective cold shoulder: “We are concerned that denying certain customers bank accounts on a wholesale basis causes significant barriers to entry and could lead to poor competition in certain markets.” However, as there is no cryptocurrency regulation in the UK, it has been left to the banks themselves to decide if they want to take the risk.
Apart from Gibraltar, Poland and Bulgaria are two destinations popular with such companies. As Brexit approaches, Gibraltar will surely be receiving a much heavier influx of British blockchain businesses. Derek Sene, COO of Gibraltar International Bank, said that the bank will now look to establish a link with a different UK bank, adding that such strategic decisions are standard practice.