Key takeaways:
- While the government continues to express a desire for a digital pound, leading UK bankers warn of the risks associated with digital currency and try to restrict access.
- Many UK banks have also alerted that the proposed digital pound poses significant risks, such as widescale revocation of traditional bank deposits.
Due to worries about fraud and volatility, bank executives in the U.K. are preventing customers from accessing cryptocurrencies.
Although executives told the Treasury Select Committee that new laws might restore confidence, social media and technological platforms were noted as a major contributor of fraud and deception.
In an effort to combat fraud, claims NatWest bank CEO Alison Rose, her institution is forbidding consumers from investing in digital assets.
It’s incredibly ironic that while banks are rethinking their use of blockchain technology, the UK government is getting ready for the “digital pound.”
The bank thinks the planning is reasonable even if it hasn’t decided whether to implement the digital pound. If it were to be adopted, the digital pound would be a kind of sterling that people and companies would use to make frequent payments. According to the release, the Bank of England and the UK Treasury will speak with stakeholders all throughout the nation to get their opinions on the suggested approach.
As a bank, “we have taken a rather harsh approach on crypto,” NatWest Group CEO Alison Rose told the House of Commons committee. Due to the platform’s fragility and security, Natwest is preventing its wealth and retail customers from putting funds into cryptocurrencies.
She states that, according to reports, 60% of NatWest clients who were the victims of hoaxes and scams in the fourth quarter of 2022 encountered them on social media and other technology platforms. As a result, the bank is making every effort to stop this “abuse against customers”.
Now, Natwest is considering cryptocurrency from the standpoint of fraud. The bank is well aware that this strict policy may irritate consumers because they may want to invest because it is their money, but the bank must prevent them if they are showing clear signs of fraud.
As per the Telegraph, some officials have even stated that customers will be prohibited from stockpiling the Bank of England’s new digital pounds.
Britons will only be able to deposit a small number of digital pounds into their accounts in order to prevent massive and sudden withdrawals from existing institutions. It would appear that the stability of the established banking system is at jeopardy due to the instantaneous characteristics of digital currency.
It is apparent that banks and other traditional financial institutions are concerned about the rapidly expanding popularity of cryptocurrencies and blockchain technology. The severe reactions are partly reasonable, if not justified, given the devastation FTX inflicted upon the entire crypto business.
Although UK banks are obviously working to safeguard investors, their strict stance on cryptocurrencies may put an end to Rishi Sunak’s (the current UK PM) ambition to turn the nation into “a global crypto-asset technological center.”
