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TSB has decided to impose a cryptocurrency ban on its customers due to fears of fraud

Author: Syedur Rahman  24 June 2021

Syed Rahman considers the thinking behind the ban and the possible implications.

TSB is blocking its 5.4 million British banking customers from buying cryptocurrencies because of fears that the trading platforms are huge fraud risks.

The bank is taking the action because it believes fraudsters can create e-wallets and steal money because of a lack of security. 

TSB will be the biggest bank to take such action. It is especially concerned about Cayman Islands-registered Binance, which is one of the largest cryptocurrency exchanges in the world. For one month, 849 TSB customers reported suffering losses due to fraud carried out by individuals with Binance accounts.

The Financial Conduct Authority recently said that about 2.3 million adults in the UK now have cryptocurrencies, compared to 1.9 million in 2020. The UK banking industry has said that £135.1 million was lost by Britons to investment scams last year. Criminals posing online as investment advisors convince victims to give them their debit card details to credit the fraudsters’ accounts, with the money swiftly converted into cryptocurrency, which is difficult to trace.

TSB will refund customers who have been defrauded while nine other British banks operate a limited system of refunds. Binance has said it is serious about protecting its users from crime and works with law enforcement agencies to act on reports of criminal activity.

While TSB has explained the reasons for its stance, it does seem odd that it would ban customers from buying cryptocurrencies due to the rise of fraud. While fraud is clearly present in the crypto industry, it exists in all industries. 

There are now banks, such as Silvergate Bank, that recognise the value and importance of digital currencies and provide support to those working in this developing sector. More traditional banks need to be aware that imposing bans on the crypto trade puts them at risk of being left behind.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.

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