Starling Makes U-Turn on May Crypto Ban

The British digital bank overturned its earlier decision, with a new policy effective from June 23, 2021.

The Digital Bank with Huge Accolades

Starling Bank was founded in 2014 and was voted best British bank in 2018, 2019 and 2020. Starling Bank was founded to bring digital banking to its customers, taking advantage of a constantly-growing sector. Named after the Starling bird, which is known to be sociable, adaptable, friendly and supportive, these are the qualities that the bank aims to achieve. In a rather cheeky introduction on its official website, Starling was also described as birds that come in huge numbers into new territories to displace the old guard. It is a rather bold statement, but perhaps fitting concerning the digital age and how it has banished many aging concepts to the history books.


Within a short period of time, Starling Bank has achieved quite a bit of success. They have consecutively won the award of Best British Bank for 3 straight years through customer satisfaction scores, which is by no means an easy feat.

Starling, Monzo and Revolut have changed the UK’s banking scene through their revolutionary application based virtual banks without physical presence. Attracting demographics between the age of 18-45, these digital institutions have started chipping away the customer base from traditional banks. 

Reason for Banning Deposits into Crypto Exchanges

On May 29, 2021, the bank took an unpopular stance by banning deposits into crypto exchanges. The reason for this drastic action was because of illegal activities on the exchanges, which were too big of an issue for the bank initially.

However, the decision was not a blanket ban, and only applied to the ‘faster payment’ options. The decision to ban was confusing to many customers because the crypto exchanges that are licensed through the Financial Conduct Authority (FCA) in the United Kingdom have the permission to operate. Therefore transactions between two licensed entities that operate within a regulated framework cannot possibly be unlawful. 

Giving the benefit of doubt to Starling, banks are encouraged to have internal regulatory controls. Apart from meeting the standards imposed by the regulators, financial institutions can exercise more caution as an internal process to prevent abuse or illegal activities. We have seen giant financial institutions like HSBC introducing policy that prevents its clients from purchasing shares in Microstrategy and Tesla because of their involvement in what HSBC calls ‘virtual currency products’. This action is also inline with its broader policy of limiting cryptocurrency trading.  

Carving a New Digital Frontier in Banking

It is difficult to see how modern day finance can ignore digitalization. The industry is rapidly changing, and with the introduction of digital assets (better known as crypto assets), the market demands are forcing adoption at breakneck speed. ‘Digital-only’ banks like Starling are gaining mainstream adoption when it would not be imaginable a decade ago that a financial institution could operate without physical presence. Crypto-related services such as custody, asset management and insurance are closely linked to existing financial services. A bridge that helps narrow the gap between the two industries will spur further adoption, and help the two sectors find the common ground needed to operate side by side. 

Avoiding Overzealous Enforcements

Users today are better exposed to investment and ownership of crypto assets. There is a ready market and huge opportunities for the financial institution to tap into. Taking an overly conservative approach may backfire. Institutions can focus their resources to ensure a more reliable platform and adopt better risk management protocols. Making decisions that have to be overturned at a later stage may not be assuring to the public. Unlike governments, financial institutions are commercial entities. They must recognize the market as it develops with time, and Starling’s reversal of its crypto ban is an indication that the evolution of crypto is far from over. 

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