Chase UK, a subsidiary of banking giant JPMorgan, has taken a decisive step in the fight against the growing menace of cryptocurrency scams and fraud. Starting from October 16, the bank will cease all cryptocurrency transactions for its customers. This move follows a disturbing rise in crypto-related fraudulent activities in the UK, including fake investment schemes and deceptive celebrity endorsements.
Rising Crypto Fraud
Recent data from the fraud reporting agency Action Fraud reveals that cryptocurrency-related fraud losses in the UK surged by over 40% in the year leading up to March 2023, surpassing a staggering £300 million for the first time. A senior banker estimated that between 20 and 25 percent of transactions initiated by their customers, involving cryptocurrency firms, were associated with fraudulent activities.
Chase UK emphasized that its decision to block cryptocurrency purchases stems from the concerning proliferation of crypto scams targeting UK consumers. The bank will prohibit the acquisition of crypto assets through Chase debit cards and transfers of funds to crypto platforms from Chase accounts.
While this policy is specific to Chase UK and not part of a broader JPMorgan group initiative, it aligns with the bank’s historical stance on cryptocurrencies. In 2018, JPMorgan announced a ban on customers purchasing cryptocurrencies using credit cards. The bank’s CEO, Jamie Dimon, has been a vocal critic of cryptocurrencies, labeling bitcoin, the most prominent digital token, as a “hyped-up fraud” in January.
Impact on the UK Crypto Landscape
Chase UK, with over 1.6 million customers and £15 billion in deposits as of May, represents a modest segment of the UK retail banking sector. Nevertheless, its decision adds to a growing trend among banks to restrict customer engagement with digital assets. NatWest, for instance, introduced transaction limits to protect consumers from significant financial losses in March. HSBC also prohibited the use of credit cards for cryptocurrency purchases earlier that year.
TSB, a high street challenger bank, began blocking cryptocurrency transactions in 2021, citing the elevated risk of fraud. Similarly, digital bank Starling has prohibited cryptocurrency trading and acquisition since November of the previous year.
Cryptocurrencies such as bitcoin and ether currently operate with minimal regulation in the UK, although regulatory bodies are actively considering strategies for overseeing this asset class. To combat misrepresentation and fraudulent activities, crypto firms operating in the UK will need to adhere to new regulations imposed by the Financial Conduct Authority, including a ban on “refer a friend” type promotions, starting from October 8.
The move by Chase UK underscores the financial industry’s growing concerns about the risks associated with cryptocurrencies and the urgent need to protect consumers from falling victim to crypto-related scams and fraudulent schemes.
