A formal inquiry launched by the UK's Crypto and Digital Assets All-Party Parliamentary Group (APPG) on 21 July 2026 is putting major banks on notice to justify their policies of blocking payments and denying accounts to digital asset companies. Co-chaired by Lord Vaizey of Didcot, a former digital economy minister, and Labour MP Gurinder Singh Josan CBE, the inquiry is collecting evidence until 31 August 2026, just weeks before the Financial Conduct Authority (FCA) opens its new crypto authorisation gateway on 30 September. The inquiry is administered with CryptoUK, a crypto industry trade association, serving as secretariat.

The timing matters. The FCA published its final crypto rulebook on 30 June 2026, creating a comprehensive licensing framework covering trading platforms, custodians, stablecoin issuers, staking providers, and intermediaries. Parliament had passed the enabling legislation, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, on 4 February 2026. Full mandatory compliance kicks in on 25 October 2027. The central question the APPG wants answered: once a crypto firm holds full FCA authorisation, will banks treat it like any other regulated financial business, or keep the doors shut anyway?

The scale of the problem is documented in data. A January 2026 survey by the UK Cryptoasset Business Council found that roughly 40% of payments sent by customers to crypto exchanges were being blocked or delayed by their banks. Eight out of ten exchanges surveyed reported a rise in customer transfer blocks compared with the previous year. Around 70% said the banking environment had grown more hostile, and the same share reported that conditions had made them less willing to invest, hire, or expand in the UK. One exchange told researchers that its rejected transfers over a single year added up to approximately £1 billion, a figure reflecting that firm's individual experience rather than an industry-wide aggregate. Among UK banks, Chase UK, Starling, Metro Bank, TSB, and Virgin Money operate blanket bans on crypto-related payments. HSBC allows transfers but caps them at £2,500 per transaction and £10,000 over a rolling 30-day period. Barclays, NatWest, and Santander apply their own per-transaction limits, typically in the range of approximately £1,000 to £2,500.

The APPG is asking banks to explain the scope of account access and service restrictions they impose, the basis for transfer caps and payment blocks, whether those measures are proportionate, and how banks intend to respond once the new FCA regime is in force. The group's co-chairs said in their inquiry launch statement: "Access to banking services is fundamental for any legitimate business, and where unnecessary barriers exist they have the potential to hinder growth, investment and innovation." HM Treasury Economic Secretary Lucy Rigby made a related point in Parliament in March, indicating that the government would not expect FCA-licensed crypto firms to face restrictions simply because they operate in the sector. The banking industry's main lobby group, UK Finance, has maintained that banks "have a duty to protect their customers and make risk-based decisions."

For communities outside traditional financial markets, the consequences are practical and immediate. The UK is home to large South Asian and African diaspora populations who rely on crypto platforms as a lower-cost alternative to traditional remittance channels. Globally, more than $400 billion in crypto value was transferred to low- and middle-income countries in 2024, much of it tied to remittance use cases. Nigeria recorded $25 billion in on-chain centralised exchange volume in March 2025, partly driven by the naira's devaluation. When UK banks block transfers to those platforms, users from Nigerian, Ghanaian, Pakistani, Indian, and Kenyan communities face reduced options for moving money. India alone is home to approximately 90 million crypto users, and Indian-heritage founders and fintech operators with UK ties are among those most directly affected by restrictive banking policies. Pakistan's central bank, by contrast, reversed a seven-year ban on banks serving crypto firms in April 2026, authorising regulated institutions to open Client Money Accounts for licensed virtual asset providers. That shift followed the Virtual Assets Act 2026, passed in March 2026, which established the Pakistan Virtual Assets Regulatory Authority (PVARA) and created the legal basis for the new banking rules. That policy approach is precisely the kind of structured framework the APPG is now pushing UK banks to adopt voluntarily.

The inquiry's structural weakness is significant. APPGs carry no binding authority. They cannot compel witnesses, force evidence disclosure, or require banks to change policy. Their output is advisory. This is the group's second inquiry on the same subject: its 2022 to 2023 report identified banking access as "one of the most significant barriers facing the sector," yet the situation deteriorated further in the years that followed. A parallel dynamic has played out across Europe, where firms that secured compliance under the EU's MiCA crypto framework in 2025 and 2026 found that regulatory status did not automatically unlock banking services, a pattern observers have labelled the "MiCA Banking Paradox." Several UK-based crypto operators have already redirected resources toward Dubai, Singapore, and Zug, Switzerland, jurisdictions that have attracted businesses with tax incentives, regulatory clarity, and active crypto licensing programmes. One anonymous UK exchange told CoinDesk: "If we are registered with the FCA, it should not be this challenging for U.K. businesses. As a result, we have prioritised other markets."

Crypto firms and fintech operators with UK exposure have until 31 August to submit evidence to the inquiry. The more consequential test comes in the months after September, when the FCA begins processing authorisation applications and the industry finds out whether a full licence changes anything at the bank counter.