The US Senate failed to advance the CLARITY Act on Tuesday, marking a significant setback for the cryptocurrency industry. As reported by Reuters, Bitcoin fell more than 5% as the vote appeared on track to fail, representing its biggest daily percentage decline since June. Shares of crypto exchange Coinbase and stablecoin issuer Circle fell as much as 10% following the failed vote. Coinbase CEO Brian Armstrong expressed disappointment in a social media post, stating "The CLARITY Act didn't advance in the Senate today, which was a disappointment." Armstrong added that "The SEC and CFTC have the tools they need to create clear rules under existing authority, and I expect will begin working on this in earnest." The failed legislation leaves US regulators, particularly the Securities and Exchange Commission and the Commodity Futures Trading Commission, positioned to fill the crypto policy void.
The Bank of England has received a new secondary objective in August 2025 to support innovation in payment systems and emerging forms of digital payments, including stablecoins. This represents an important institutional shift as the Bank historically approaches new financial developments through the lens of stability, resilience and risk management. The Bank of England will report annually to Parliament on how it has advanced the innovation objective, providing stakeholders with oversight of its progress in enabling innovation within the digital payments system. This mandate extends the Bank's existing innovation objective for central counterparties and central securities depositories to include payment systems using digital settlement assets such as stablecoins. The Bank of England's innovation mandate sits alongside, rather than above, its existing responsibilities, with financial stability remaining its primary concern and the new mandate requiring the Bank to report annually to Parliament on how it has advanced innovation objectives.
Nine major UK banks currently impose widespread restrictions on payments to cryptocurrency exchanges, with restrictions differing considerably across institutions. According to reports from crypto.news, Barclays limits personal and business transfers to £2,500 per transaction and £10,000 per calendar month, while its debit-card crypto limit is £10,000 monthly. HSBC UK imposes the same £2,500 single-payment limit and £10,000 rolling 30-day ceiling on both bank and debit-card payments to crypto exchanges. NatWest has tighter controls with payments capped at £1,000 per day and £5,000 across 30 days, while Santander limits identifiable cryptocurrency-exchange payments to £1,000 for each transaction and £3,000 during a rolling 30-day period. Chase UK blocks every payment it identifies as a cryptoasset transaction, covering both bank transfers and card payments to exchanges, and Metro Bank has not processed outbound payments to known crypto exchanges since November 2024. In August, the All-Party Parliamentary Group (APPG) on Crypto and Digital Assets wrote to the chief executives of HSBC, Nationwide, NatWest, Santander UK and Starling Bank over restrictions on crypto-related payments, expressing concerns about whether banks are effectively limiting access to the financial system for legitimate crypto businesses and customers.
The Financial Conduct Authority has published new guidance to help crypto businesses identify whether their activities will require authorization when the full UK regulatory framework begins on October 25, 2027. As reported by crypto.news, the application period runs from September 30, 2026, through February 28, 2027, with the FCA's authorization gateway opening at 9 a.m. on September 30. The framework covers operators of cryptoasset trading platforms, custodians, principal and agency dealers, firms arranging crypto transactions, staking intermediaries and issuers of qualifying stablecoins. Companies conducting regulated crypto activities will need authorization under the Financial Services and Markets Act, with firms already registered under Money Laundering Regulations needing to apply for new permissions if their businesses fall within scope. HM Treasury stated in a March parliamentary answer that decisions about providing banking services remain 'largely commercial in nature', with the government expecting businesses to be treated fairly and not expecting FCA-licensed crypto companies to face restrictions merely because they operate in the crypto sector. The Prudential Regulation Authority (PRA), which oversees the safety and soundness of banks and other major financial institutions, has exercised its own statutory functions and regulatory responsibilities since 2017.
Industry research reveals significant challenges in crypto banking access, with roughly 40% of UK bank-to-exchange crypto transfers currently blocked or delayed according to UK Cryptoasset Business Council research cited by The Block. As reported by crypto.news, eighty percent of surveyed exchanges reported increased customer friction over the previous year. The APPG's concerns have become associated with the language of the Biden Administration's "Operation Chokepoint 2.0" — the idea that crypto firms can be constrained not through explicit prohibition, but through their access to banking and payment services. The UK Cryptoasset Business Council has been pressing regulators and lawmakers to change the current arrangement, while Stand With Crypto UK launched a campaign in June asking members to challenge bank restrictions on transfers to exchanges. A cross-party parliamentary group opened an inquiry this summer examining difficulties crypto firms face when seeking bank accounts and payment limits imposed on retail users. For businesses, regulatory permission does not automatically translate into operational viability, with the Bank's new mandate unable to solve this practical challenge by itself.
The Bank of England's innovation mandate faces significant limitations in addressing the UK's crypto challenges, as cryptocurrency firms operate across central banking, financial markets, consumer protection, banking, payments and financial crime frameworks. According to analysis from the All-Party Parliamentary Group on Crypto and Digital Assets, no single regulator controls the entire journey of a crypto business, with responsibility for the wider banking system divided between different institutions including the PRA, the FCA, and commercial banks themselves. The PRA independently decides how to apply and enforce regulatory measures on individual commercial banks, creating an institutional reality where a commercial bank may still decide that the risks associated with serving a crypto business outweigh the potential commercial benefit. This regulatory complexity means that regulatory permission does not automatically translate into operational viability, with the Bank's new mandate unable to solve this practical challenge by itself. The Bank of England's innovation mandate cannot, by itself, solve the problem of operational viability for crypto firms, as it only controls part of the environment in which they operate. The experience of crypto suggests that a regulatory system can support innovation only if its different parts work together, and a central bank may become more responsive to new technology, but that will have limited impact if other parts of the financial system continue to create barriers.
Additional regulatory changes are planned alongside the current framework, with HM Treasury updated its crypto legislation on September 15 after reviewing industry feedback about parts of the framework. The FCA plans an October consultation addressing how those changes affect its perimeter guidance, including qualifying stablecoins, proprietary trading and market making, technical service providers, decentralized protocols and safeguarding arrangements. The government's December statement indicated its framework is intended to provide companies with clearer rules while strengthening consumer safeguards as part of efforts to make Britain a global destination for digital assets. The Bank of England's innovation mandate is ultimately testing a broader assumption about financial regulation: that innovation can be encouraged simply by adding innovation objectives to individual regulators. The experience of crypto suggests that the problem may be more complex than simply adding innovation objectives, as a regulatory system can support innovation only if its different parts work together. The next phase of crypto regulation may therefore not be about asking regulators to become less cautious, nor simply about giving more institutions an innovation mandate, but instead about ensuring that regulators with different responsibilities can work together to create a system in which innovation is not only legally permitted, but practically possible.
