Starling Bank has joined other UK-based banking companies to end support for transactions related to crypto.\

Amid the cryptocurrency market tumult, a UK digital banking company Starling Bank has tightened restrictions on transactions related to digital currencies. Business Cloud reported that the bank wrote to customers, saying it’s blocking all card payments to/from crypto exchanges and merchants.

UK Banks Are Now Blocking Crypto-Related Transactions

Stating the reason, a spokesperson for Starling Bank said cryptocurrencies have become extremely risky and used for illicit purposes.

“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 spokesperson said.

Earlier in November, another bank Santander UK took similar actions to block customers from making payments to crypto exchanges and investing in digital assets in the wake of FTX’s saga.

FTX Collapse Incites Extreme Market Volatility

The second-largest exchange then, FTX, filed for bankruptcy three days after suspending user withdrawals, trapping billions in customers’ assets. Several companies were exposed to the collapse, which rattled many investors and spurred extreme volatility in crypto prices to the downside.

Amid the chaos, crypto market capitalisation fell to $727 billion. The largest cryptocurrency, bitcoin, dropped to a two-year low of $15,476, while Ether touched a four-month low of $1,073. The present situation in the cryptocurrency market is so intense that Santiment data suggest many traders have become extremely bearish and could be giving up on a possible market rebound.

Regulators are Also Taking Action in Response to FTX’s Fallout

UK banks and financial regulators are also beginning to take action in response to the FTX collapse and the crypto market crisis. In South Korea, the regulators are discussing forming a law to obligate the establishment of a system whereby crypto user deposits are kept separately from exchanges’ own assets, among other things.

(By Ibiam Wayas)