UK bank Starling bans crypto-related purchases and deposits citing high risk

UK bank Starling bans crypto-related purchases and deposits citing high risk

Starling has banned its customers from purchasing cryptocurrencies with their bank cards or receiving transfers from crypto merchants.

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UK bank Starling bans crypto-related purchases and deposits citing high risk

Starling — a digital bank based in the United Kingdom — is the latest financial institution to ban crypto-related transfers and activities for its cardholders.

Starling customers will no longer be able to purchase cryptocurrencies like Bitcoin

BTC

tickers down

$16,544

or receive incoming transfers from crypto exchanges or merchants.

The online bank announced the news in a statement to customers as well as on Twitter, citing the perceived high risks of crypto trading.

Hi there We always review our position in relation to financial crime. We consider crypto activity to be high risk. We’ve taken the decision to prevent all card payments to crypto merchants and to implement further restrictions on outgoing and incoming transfers.

— Starling Bank (@StarlingBank) November 22, 2022

The bank also described cryptocurrencies as “high risk and heavily used for criminal purposes.”

A spokesperson for Starling told Cointelegraph that the bank has had restrictions of “varying degrees” on transactions related to cryptocurrency for some time. “We recently tightened restrictions on inbound and outbound transactions by card and bank transfer,” the representative stated, adding:

​​“The innovative technology, and thinking, behind cryptocurrencies have great potential advantages. However, right now, they are high risk and heavily used for criminal purposes and, as such, we no longer support them.”

The bank’s measures come amid the ongoing industry scandal involving FTX, one of the world’s biggest crypto exchanges that allegedly misappropriated user funds with its sister firm Alameda. According to FTX’s bankruptcy filing, the firm owes more than $3 billion to its 50 biggest creditors, while the total amount of creditors reportedly numbers over 1 million investors.

Some members of the crypto community believe that some restrictions on crypto activity by banks seem reasonable but a blanket ban is not the best solution.

“While it is understandable to block individual transactions that banks believe are outright fraud, banning legitimate transactions involving an entire industry is unacceptable,” SovrynBTC argued in a tweet on Thursday. The crypto enthusiast also asked why banks do not care about many other types of risky transactions by their customers, including trading stocks or gambling.

4:

Banks do not meddle in any other “high risk” activities – they’ll happily let you purchase tobacco, alcohol, or prescription drugs. Or let you trade stocks or gamble.

Where’s the logic?

— Sovryn | DeFi for Bitcoin (@SovrynBTC) November 24, 2022

The latest restrictions are not the first time Starling has cracked down on crypto-related activity. The bank briefly halted payments to crypto exchanges in May 2021 over similar concerns, citing “high levels of suspected financial crime with payments to some cryptocurrency exchanges.” Starling subsequently resumed crypto exchange operations about a month later.

Related: The UK has a new name for stablecoins and a new bill to regulate crypto

The block comes a few weeks after Santander UK limited customer deposits to crypto exchanges to 1,000 British pounds ($1,196) per transaction, and a total limit of 3,000 pounds ($3,588) per month.

A number of other British banks reportedly banned crypto-related transactions completely. TSB bank banned its 5.4 million customers from buying Bitcoin in June last year. Other major lenders including Lloyds, NatWest and Virgin reportedly banned cryptocurrency purchases using credit cards in 2018.

Among the main features of the Shanghai hard fork is Beacon Chain staked Ether (ETH) will be unlocked.

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Ethereum developers decided on eight proposals for the Shanghai update

Developers at the Ethereum foundation decided on eight Ethereum Improvement Proposals (EIP) to explore for the Shanghai update, the next major upgrade after the Merge and its move to proof-of-stake consensus, announced the Ethereum Foundation on Nov. 24. 

On a weekly call, developers decided what features should be included in the next hard fork, which will be released in the second half of 2023. According to the Ethereum Foundation JavaScript Team on Twitter:

We are happy to announce the launch of an early Pre-Shanghai testnet we are calling “Shandong”. https://t.co/1HpFTPUMOU

This is an experimental testnet run in cooperation with EF DevOps which activates a set of selected Shanghai-considered EIPs for early client testing.

: https://t.co/VJ4kWxupG3

— EF JavaScript Team (@EFJavaScript) October 14, 2022

One of the main features expected to be in the Shanghai hard fork, Beacon Chain staked Ether (ETH) is set to be unlocked, allowing the assets will be able to be withdrawn with the upgrade, meaning that users with staked Ethereum prior to the Merge will be able to access those tokens, as well as any other rewards. A previous timeline anticipated locked ETH to be accessible 6-12 months after the Merge. 

Among the approved proposals is the EIP 4844, which focuses on leveraging proto-danksharding technology, and is expected to boost network throughput and slash transaction fees, a significant improvement for scalability. Other EIPs address the upgrade of Ethereum Virtual Machines, including EIP 3540, EIP 3670, EIP 4200, EIP 4570, and EIP 5450.

The Shanghai testnet version, dubbed Shandong, went live on Oct. 18, allowing developers to work on implementations such as Ethereum Virtual Machine (EVM) object format, is one of the community’s most-anticipated updates since it separates coding from data, which could be beneficial for on-chain validators.

As previously reported by Cointelegraph, the Merge was the first step in this five-part process, which has since been elaborated upon by a number of Ethereum developers, ecosystem participants and commentators. The key change of the Merge is the drastic reduction in power consumption, which should reduce Ethereum’s energy usage by 99%. 

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