CryptoUK has advised regulators to introduce a “whitelist” of platforms that have “engaged with the UK’s regulatory perimeter”.

The whitelist would help determine which crypto transactions should be allowed to take place freely, the lobby group said.

In a letter the economic secretary, Su Carpenter, director of operations at CryptoUK, said that blanket bans and restrictions of transfers from UK banks to crypto asset platforms – which a number of large UK banks have elected to do – will “fundamentally undermine” the government’s desire to become a crypto asset hub.

Carpenter concluded that, if left unaddressed, the UK government’s failure to act could stymy Web3 innovation and tech development in the UK.

Banks including NatWest, Santander, and HSBC, have all recently imposed limits on payments to crypto exchanges, with TSB and Halifax imposing outright bans on payments to popular exchanges Binance and Coinbase.

Nationwide and HSBC recently moved to decline customer payments to crypto exchanges using its credit cards, with Nationwide setting a £5,000 daily limit on crypto payments made using its debit cards.

On its recent move to ban the purchase of Bitcoin using its credit cards, Lloyds said the measures were taken to protect customers from the risks associated with the price volatility of cryptocurrencies seen in recent months.

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