Is the UK's Crypto Desert Taking Shape? HSBC Bans Exchange Users from Depositing or Withdrawing Funds, FCA Issues Warning: Be Prepared to Lose All Your Money

The UK has always been known for its strict regulations in the cryptocurrency industry. The Financial Conduct Authority (FCA) has issued a statement warning cryptocurrency investors to "be prepared to lose all their money"; meanwhile, one of the largest banks in the UK, HSBC, has announced that it will no longer provide services for transactions between users and exchanges.

FCA Announcement: Warning of High Risks

The UK regulatory authority has been closely monitoring the cryptocurrency market in recent years. The derivative trading ban issued in October last year took effect on January 6th this year. Sheldon Mills, FCA's Executive Director of Strategy, stated in the announcement:

We have substantial evidence that crypto assets are highly volatile and their true value is difficult to assess. Implementing the ban will save investors who may suffer losses tens of millions of pounds.

On January 11th, FCA once again updated its previousannouncement, cautioning the public about the high risks of cryptocurrencies:

FCA is aware that some companies are offering crypto assets or investments related to them that promise high returns. However, investors in such assets typically face extremely high risks, and those investing in them should be prepared to lose all their money.

In practice, FCA's announcements tend to focus more on warning against crypto Ponzi schemes and scams, but the ban on trading crypto derivatives remains puzzling. This may lead the public to switch to unregulated platforms or offshore exchanges, providing no protection for investors.

Furthermore, the regulatory negative news includes the message that HSBC Bank will no longer provide services to exchange users.

HSBC Halts Exchange-Related Services

According to The Times, due to anti-money laundering (AML) regulations, HSBC Bank has stopped allowing exchange users to deposit or withdraw funds through banking services, forcing users to seek fiat withdrawal channels through other banks or OTC traders.

HSBC Bank has been controversial in recent years. Following the large-scale anti-extradition protests in Hong Kong, it not only allegedly froze bank accounts of participants in the protests but also sparked controversy by freezing the accounts of a pro-democracy church in Hong Kong after the passing of the National Security Law.

In addition, last year's leaked FinCEN confidential documents exposed over $2 trillion in illegal transactions involving major international banks between 1999 and 2017. Although HSBC Bank had reported suspicious activities multiple times, it allowed Chinese national Xu Ming to continue operating his Ponzi scheme involving up to $80 million in the United States.

Although cryptocurrencies have long been associated with "dark web currencies" linked to illegal transactions, their volume in fiat transactions compared to traditional financial systems remains extremely low. This is also one of the reasons why crypto industry institutions strongly oppose unhosted wallet regulations.