JPMorgan UK’s bank will ban customers from buying cryptocurrency as of next month, to combat the increasing number of criminals who use digital assets to target their victims.
The Chase UK ban, which was notified to customers via email on Tuesday, is a significant step forward as British lenders strive to prevent their networks from being used in scams and frauds.
While some banks, such as HSBC and NatWest have placed restrictions on crypto purchases, outright prohibitions are rare.
Chase’s UK block will be implemented on October 16th. Data showing the high rates of fraud and crypto scams in the UK including false investments and celebrity endorsements were used to inform the decision.
According to Action Fraud, the losses from crypto-related fraud increased by more than 40%in March 2023. They exceeded £300mn, a new record, for the first. A senior banker estimated between 20 and 25% of transactions from customers’ accounts sent to cryptocurrency firms are fraud-related.
The bank stated that it had seen an increase in crypto scams aimed at UK consumers. Therefore, the bank has decided to prohibit the purchase of cryptocurrency assets using a Chase debit account or by transferring funds to a crypto website from a Chase Account.
JPMorgan, which is the parent company of Chase UK, announced in 2018 that they would not allow customers to purchase cryptocurrencies using credit cards. Jamie Dimon, chief executive of JPMorgan, has long been a critic of cryptocurrency and in January said that bitcoin, which is the oldest and most well-known token, had become a “hyped up fraud”.
Chase, with 1.6mn clients in May, and PS15bn of deposits, is only a tiny part of the UK’s retail market. Many lenders are now limiting the way customers can buy digital assets. NatWest, in March, set limits on exchange transactions to “protect customers [from] loss of life-changing amounts of money”. HSBC had announced a month before that customers would not be able purchase cryptocurrencies using their credit cards.
High street challenger TSB started blocking crypto in 2021 citing the high fraud rate, while digital banking Starling has prohibited the buying and trading of cryptocurrencies since November last year.
In the UK, cryptocurrency including bitcoin and Ether are not regulated at all. Regulators are still evaluating how to best oversee this asset class.
To combat misrepresentation in the crypto industry, the Financial Conduct Authority has imposed new rules on UK-based firms that will take effect on October 8. These include a prohibition on referral promotions.