I have been buying cryptocurrencies since 2017 when it started to get exciting. For a few years it wasn’t a problem. I would just transfer money from my high street bank into the crypto-trading platform of my choice and then get on with buying (very rarely selling) the crypto i was interested in.
No problem there.
Then this year, to my dismay, just when the price of Bitcoin plunged and I could see it was a ‘buy’ opportunity, my annoying bank refused to allow me to move MY money into the crypto platform I had been using since 2017.
Who do they think they are?
They think they own my money (more on that in future articles) and they think they can beat the encroaching cryptocurrency takeover by refusing to play with these new kids on the block.
It’s not going to happen. We will just find ways around it. And that’s what this column is all about. How to transfer money from your bank to a cryptocurrency platform.
- Why do some banks refuse to transfer money to cryptocurrency platforms?
- Which cryptocurrency platforms are generally best for new investors to use?
- How to move money from your bank to a crypto platform if your bank refuses!
- Consider investing in a crypto fund
Because they’re running scared.
Banks are open about the fact that they have been burned – through their customers – by criminals transferring money from customers’ accounts to dodgy cryptocurrency and other platforms and supposed businesses. There are a LOT of criminals around the world who are trying to get at ordinary people’s money and they have a lot of clever ways of doing it. Many of them are using the excitement over cryptocurrencies, and also Forex (foreign currency trading) to lure people into apparent investment opportunities that are actually just complete scams.
As many, many individuals in the UK have been scammed by these it’s understandable that banks would become worried by the whole sector and act cautiously.
However, you would think that banks would have the sense to discriminate between well-established, open platforms and businesses that have been operating for a while and new, fly-by-night operations that have no clear backing. You would think that they would be able to have a list of operations they have checked out and those they do not trust. You would also think that they could and should allow their customers to sign a declaration that they have weighed up the pros and cons of an investment and can be trusted to make up their own mind and take the consequences.
But no. Many high street banks are now taking it upon themselves to make our decisions for us, for good or ill (mostly ill I consider).
The other thing that is making banks run scared is the fact that crypto companies are genuine competition to them.
Our high street banks are mostly long, long-established organisations that are big and lumbering and find it difficult to change and certainly difficult to keep up with the fast-moving business of ‘Fintech’ (Financial Technology).
Frankly, cryptocurrencies are a big threat to them and they are trying to attack the competition by stopping us, their customers, from investing in them. They won’t admit that but that is what I think they’re doing.
Crypto trainer and commentator, Gary Nuttall, says “The banks in UK keep reducing the ability for people to buy/sell crypto. They will either red flag transactions (which means they’ll refuse to execute claiming it’s a suspicious activity) or they just blacklist certain accounts known to be associated with crypto exchanges.” This is unhelpful to those of us who consider we know what to do with our money, or at least we know as much as these banks know (which is not a lot frankly!).
The ones that I tend to recommend include the following:
- Coinbase – the largest and best-established platform. It’s not cheap – their charges for buying and selling are quite high – but it’s easy to use and secure
- Kraken – a very well-known and well-established platform. A lot of serious crypto enthusiasts use Kraken.
- Binance – a well-established platform that has a very wide range of coins available. However the FCA doesn’t like it and it’s very difficult to move money there from pretty much any bank account.
You can find out more about these investing platforms and how to use them in this article that reviews the main ones.
The crypto platforms themselves are very aware of the problems customers have in moving money to them and, as you would expect, they’re not happy about it!
Curtis Ting, Managing Director for EMEA of crypto platform Kraken says that platforms like his that are registered with the UK Financial Conduct Authority (FCA) operate to the same professional standard and in a similar supervisory regime to that of banks but even so, their clients get blocked by banks that take a sweeping view of all crypto platforms.
He says “We take a collaborative approach to the global adoption of cryptocurrency by building strong connections with traditional banks and regulators. With these relationships we ensure our products meet the compliance standards expected by our banking partners whilst expanding the range of options available to our customers to deposit and withdraw their funds.
The crazy thing is that if your bank refuses to allow you to move your own money to a particular crypto platform, and you want to stay with this bank, you effectively have to behave like a money-launderer in order to get around it!
buy with applepay or paypal or googlepay
One way to get round it is to buy Bitcoin through PayPal, ApplePay or GooglePay (which would automatically transfer money from your bank account to their own platform) and then send those coins to your chosen cryptocurrency platform via your ‘private key’. Your private key is the long series of letters, numbers and characters that forms the ‘password’ to your cryptocurrency wallet.
Once the Bitcoin payment is in your wallet on the platform you can then either
- keep them there as Bitcoin or
- use them to buy other coins like Ethereum, Litecoin, XRP or Monero
Curtis Ting at Kraken says “the integration of Apple Pay and Google Pay to support customers trading cryptocurrency via our Kraken App is helpful. This feature allows for a convenient method of seamlessly making purchases whilst on the move and can be completed in just three simple steps.”
Gary Nuttall says “I’ve not done it myself but some people use their bank account linked to Paypal (so they can transfer FIAT to/from their bank) they then use Paypal to buy sell BTC, ETH, LTC or BCH. Then they use this to trade on exchanges for other crypto. It’s a complete pain as it starts to look like you’re money laundering when in fact you’re doing the process precisely because you’re trying to comply!”
get the destination ‘whitelisted’
Gary Nuttall says “Speak to your bank to see if you can get the exchange account whitelisted (or at least get them to approve transaction as not suspicious)
Many banks will not do this but it’s worth asking,.
switch to a bank that will transfer your cash
Jonny Fry from TeamBlockchain Ltd says “I have a direct debit from Lloyds bank and buy every fortnight a selection of cryptos”
Gary Nuttall says “It’s a constant frustration dealing with the likes of Lloyd’s, HSBC and Barclays. They each seem to operate to a set of unwritten rules! I think even some of the challenger banks such as Monzo have gone a bit anti-crypto lately.”
At MoneyMagpie we contacted the press offices of a number of high street banks to see whether they would allow customers to transfer money to cryptocurrency platforms. This is what we were told:
Barclays – one spokesperson said you could put money on any crypto platform apart from Binance. However another spokesperson said that they would not allow money transfers to any cryptocurrency platforms. My experience is that they will not do it.
HSBC – Some use HSBC to put money onto Coinbase, but they don’t allow transfers to binance
Halifax – It doesn’t allow you to put money into Binance but it does with the others although they are constantly reviewing the risk of each platform
Lloyds – You can only use debit cards not credit cards to purchase
Metro – A spokesperson said “Metro Bank has a restricted appetite relating to payments being made to cryptocurrency exchanges and we have controls in place to manage risks from a fraud and financial crime perspective. This can include restricting transactions with certain cryptocurrency exchanges, including those which are deemed to present heightened fraud and financial crime risks.
“We will continue to assess and review the regulatory landscape relating to cryptocurrency as well as our controls whilst working closely with other stakeholders including banks, network operators and law enforcement agencies to continue to protect customers from fraud.”
NatWest – Have begun restricting payments to crypto exchanges depending on the level of scams being reported to them. Binance is no go for them as well
Santander – Like most places they won’t support Binance but may do to some other platforms
TSB – No crypto at all. It says on their website that “From August 2021, we will no longer facilitate transactions to cryptocurrency exchanges. The Financial Conduct Authority (FCA) has warned about the extremely high risk involved in investing in cryptocurrency and we are seeing an increasing level of fraud and financial crime through cryptocurrency merchants. Therefore, we have taken the decision to not support cryptocurrency transactions. We’ll send you a text letting you know your transaction has been declined.”
Revolut – Not a high street bank but still technically a bank. Allows you to purchase crypto on multiple platforms including Binance. Also have the ability to buy it directly on their own app
use specialist services
Curtis Ting from Kraken says “Another option for UK traders is to use our custodial service, Etana Custody, to fund their Kraken account with GBP. This funding provider, suitable for larger deposits, enables customers to transfer funds to their Kraken trading account via a wire transfer from an Etana Custody account.
“We look forward to rolling out more exciting funding mechanisms shortly and urge any customers who continue to experience challenges depositing to their Kraken accounts to contact our Support Team.”
Jonny Fry from TeamBlockchain Ltd recommends investing in a well-regarded investment fund that has significant crypto holdings.
He says “I have personally bought some shares in Kasei holdings – which is a quoted company that you can hold in an AJ Bell pension and so is a way to get exposure to crypto. Approximately 30% BTC and ETH the rest spread across a broad range of managed cryptos by a team with huge trading experience in equities and derivatives who have invested their own money to set up and list the company.
This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.