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JPMorgan Chase UK shouldn’t ‘deplatform’ crypto industry

Coinbase Global Inc. CEO Brian Armstrong speaks at the Messari Mainnet Summit in New York on Thursday, September 21, 2023.

Michael Nagel | Bloomberg | Getty Images

Coin Library CEO Brian Armstrong JPMorgan Chase decided to block cryptocurrency-related transactions from its UK digital banking subsidiary Chase UK.

Chase Bank in the UK notified customers earlier this week that it would no longer allow customers to use debit cards or bank transfers to purchase cryptocurrencies, citing concerns about the risk of digital token fraud to users.

The bank, which has been operating as an independent entity in the UK since 2021, said it took the move because “fraudsters are increasingly using crypto assets to steal large sums of money from people.”

“We occasionally see a bank in the world decide to de-platform an entire industry,” Armstrong told CNBC’s “Squawk Box” on Thursday.

“I don’t think that’s okay. I don’t think that’s the rule in our society. I think the government should decide what’s allowed and what’s not allowed.”

Chase’s move didn’t happen out of nowhere. Other UK banks have taken similar steps to ban cryptocurrency trading, citing the risk of fraud.

Examples include NatWest, which places limits on the amount of cash that can be sent to cryptocurrency exchanges, and HSBCthe purchase of cryptocurrencies is completely prohibited.

Cryptocurrency Fraud Issues

In a note to clients on Tuesday, Chase said it was blocking customers from using cryptocurrencies over concerns about rising fraud.

Actor Ben McKenzie says cryptocurrencies exploit gray area between securities and commodities regulation

Data from Action Fraud, a UK fraud reporting agency, shows that UK consumer losses due to cryptocurrency fraud increased by more than 40% last year, exceeding £300 million for the first time.

Bitcoin, ether, Ripple Other cryptocurrencies are not legal tender.

They were originally created as an alternative form of online money designed to bypass bank accounts and other financial middlemen, but are now increasingly embraced by mainstream financial institutions such as PayPal, Visa and Mastercard.

But they have long been linked to illegal activities such as money laundering terrorist financing and illegal gamblingespecially due to their anonymous nature.

People who transact using Bitcoin and other digital currencies do not reveal their true identities, making it harder for banks to track their suspicious payments to digital fiat currency transactions.

Cryptocurrency legalization

Still, cryptocurrency proponents say the industry has matured a lot in the wake of the FTX debacle and numerous other scandals. They say it can become part of everyday payments and transactions in a legal way.

For its part, the UK has been working on legislation to regulate retail trading of crypto assets.

The Financial Services and Markets Bill is an example of legislation that already contains some provisions regarding cryptocurrencies. This specific law aims to bring crypto-assets within the scope of regulation. But this is not a comprehensive law that addresses encryption issues through tailor-made laws.

Andrew Griffith, the UK’s economic secretary to the Treasury, told CNBC’s Arjun Kharpal, A law targeting cryptocurrencies may be passed by April 2024.

Jurisdictions around the world, from Dubai to Singapore, have been trying to position themselves as crypto-friendly regions to encourage companies to set up offices there.

Meanwhile, the United States has taken a tough stance against cryptocurrency companies, with regulators stepping up enforcement actions against them.

Armstrong suggested that the UK government should take note of Chase UK’s move to ban crypto payments, although he admitted that the country has ambitions to become a “web3 and cryptocurrency hub”.

Armstrong said: “The British government, through (British Prime Minister) Rishi Sunak and London City Minister Andrew Griffith, has made it clear that they want to make the UK a Web3 and encryption Money center.”

“They are trying to attract businesses there. I am disappointed with Chase UK’s stance on this. I hope this is a misunderstanding and will be clarified in the coming weeks.”

watch: Coinbase CEO joins Capitol Hill entrepreneurs to push for clear cryptocurrency rules: CNBC Crypto World

Coinbase CEO joins Capitol Hill entrepreneurs to push for clear cryptocurrency rules: CNBC Crypto World
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