UK Lawmakers Question Banks on Crypto De-Banking: What Accounting Firms and CFOs Must Assess Now
A cross-party group of UK lawmakers has taken the formal step of writing to major banks to ask why so many crypto and digital asset businesses are being refused banking services. The Crypto and Digital Assets All-Party Parliamentary Group (APPG) sent letters demanding that lenders explain their approach to serving this sector. For accounting firms, auditors, and CFOs who work with digital asset clients, the intervention marks a significant escalation: de-banking is no longer just an operational headache for crypto founders, it is now a subject of active parliamentary scrutiny with direct implications for client risk profiles, going-concern assessments, and AML documentation.
What the APPG Has Done and Why It Matters
The Crypto and Digital Assets APPG is a formally constituted cross-party parliamentary group whose membership spans both the House of Commons and the House of Lords. APPGs do not have the direct legislative power of a select committee, but they carry real political weight: their inquiries generate written evidence, hold public sessions, and produce reports that regulators and ministers are expected to address on the record.
By writing directly to banks and asking them to set out their policies on crypto clients, the APPG is doing two things simultaneously. First, it is putting lenders on notice that parliament is watching. Second, it is creating a formal record of bank behaviour that could feed into FCA supervisory reviews or future Treasury consultations on access to financial services.
The De-Banking Problem in Context
The issue is not new. UK-registered crypto firms, including those fully registered with the Financial Conduct Authority under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, have for several years reported systematic difficulties in opening or retaining business current accounts, payment processing facilities, and correspondent banking relationships. Banks have generally cited concerns about AML risk and compliance cost as justification, but the practical effect has been that some FCA-registered firms cannot access basic financial infrastructure despite having cleared the regulator's own registration process.
This creates a paradox that the APPG appears determined to surface publicly: a business can be approved by the FCA as a fit-and-proper entity under anti-money laundering rules and still be refused a bank account by a high-street lender. The asymmetry matters for accounting firms because it complicates the drafting of audit opinions and going-concern disclosures for any digital asset client that faces real banking fragility.
Parliamentary Process: What Comes Next
Once banks respond to the APPG's letters, the group is likely to publish their responses and may call executives to give oral evidence. Any resulting report will typically include recommendations addressed to HM Treasury, the FCA, and the Payment Systems Regulator. The FCA has its own ongoing work on access to financial services, and pressure from parliament can accelerate the pace at which guidance is formalised into supervisory expectation.
Accounting and Audit Implications for Firms and CFOs
The APPG inquiry has practical consequences for how accounting firms approach engagements with digital asset clients right now, not just if and when legislation changes.
Going-Concern and Operational Risk Disclosures
Under UK GAAP (FRS 102) and IFRS as adopted in the UK, auditors are required to assess whether a client can continue as a going concern for at least twelve months from the date of signing. A crypto firm that relies on a single banking relationship, or that has recently had an account closed without notice, faces a material liquidity risk that must be evaluated. If the firm has no credible contingency plan, that risk may meet the threshold for disclosure or even for a modified audit opinion.
Accounting firms should already be asking digital asset clients: how many banking relationships do you hold, with which institutions, and what is the contractual notice period for termination? The APPG intervention suggests that de-banking is systemic enough to warrant this question as a standard part of the risk assessment, not a one-off inquiry prompted by a specific client event.
Cash and Liquidity Reporting
For CFOs inside digital asset businesses, the inability to maintain a stable sterling current account creates downstream problems in financial reporting. Holding operational funds in stablecoins or on exchange wallets as a workaround introduces its own accounting complexity: classification under IAS 7 (or Section 7 of FRS 102) for the cash flow statement, measurement under IFRS 9 or the UK equivalent for financial instruments, and potential fair-value volatility that a straightforward bank account would not carry. Any firm using digital asset balances as a functional substitute for banking should be documenting that decision and the associated accounting treatment clearly.
AML Documentation and Client Acceptance
Accounting firms that themselves provide services to crypto businesses need to satisfy their own AML obligations under the Money Laundering Regulations. A client that is being de-banked is not automatically a higher-risk client from an AML perspective, but the circumstances warrant a documented risk review. Firms should record why the client's banking difficulty does not alter their overall AML risk rating, or conversely, update the rating and apply enhanced due diligence if it does. Robust crypto accounting software and bookkeeping workflows help here: a clear audit trail of on-chain transaction records reduces the due-diligence burden for both the accounting firm and any bank that the client is trying to onboard.
What This Means for Digital Asset Businesses as Clients
For the CFOs and finance directors of crypto firms directly affected by de-banking, the APPG inquiry opens a window of opportunity as well as a compliance obligation.
Documenting the Impact for the Parliamentary Record
The APPG is building an evidence base. Crypto businesses that have experienced banking refusals or terminations should consider whether they wish to submit written evidence to the inquiry. Participation is voluntary, but a well-documented account of the operational and financial impact of de-banking strengthens the case for regulatory intervention. Finance teams should prepare a factual log: dates of account closure or refusal, the institution involved, whether a reason was given, and the quantified cost of finding alternatives. This documentation has dual value: it contributes to the parliamentary record and it serves as internal evidence for any future regulatory complaint or legal challenge.
Scenario Planning and Banking Diversification
Regardless of how the APPG inquiry resolves, finance leaders at digital asset firms should treat banking diversification as a board-level risk management item. Holding relationships with more than one institution, maintaining access to electronic money institution (EMI) accounts as a backup, and understanding the contractual terms under which a bank can terminate the relationship without cause are all basic treasury hygiene steps that the sector has sometimes underinvested in. The inquiry should prompt a formal review of treasury policy, documented at board level and reflected in the firm's risk register.
FCA Registration Status and Its Limits
The inquiry implicitly raises a question that accounting firms advising crypto clients should be articulating clearly to those clients: FCA registration under the MLRs confers regulatory legitimacy but not commercial banking access. Clients should not assume that obtaining or holding FCA registration insulates them from de-banking. The two processes are operated by different institutions under different legal frameworks, and a bank's decision to decline a crypto client is currently a commercial decision that the FCA cannot directly override. This may change if the parliamentary and regulatory process produces new rules on access to payment accounts, but for now the separation stands.
Wider Regulatory Trajectory
The APPG inquiry sits within a broader pattern of UK policy development around digital assets. The government has stated publicly that it wants the UK to be a leading jurisdiction for digital asset businesses, and the FCA's ongoing work on crypto asset regulation forms part of that ambition. De-banking cuts directly against that policy goal: a crypto firm that cannot hold a business bank account cannot pay staff in sterling, cannot settle VAT liabilities with HMRC, and cannot operate as a going concern in any conventional sense.
Accounting firms with UK crypto clients should also track related developments in UK money laundering compliance and digital asset client risk, where AML concerns continue to shape how both regulators and commercial banks view the sector. Internationally, the same tension between AML risk appetite and financial inclusion for licensed firms is visible in the AML licensing pressures on crypto firms across APAC, suggesting this is a structural challenge for the industry globally, not a UK-specific anomaly.
The Payment Systems Regulator and HM Treasury have both previously signalled interest in the broader question of access to payment infrastructure. If the APPG inquiry generates substantive bank responses and a published report, it will add political momentum to any regulatory rulemaking in this area. Firms should track the inquiry's progress and flag its outputs to clients as part of their ongoing regulatory monitoring service.
Practical Steps for Accounting Firms and CFOs
Given where the APPG inquiry currently stands, the following actions are appropriate now rather than after any report is published.
For Accounting and Audit Firms
Review your client portfolio for any digital asset businesses that have flagged banking difficulties in the past twelve months. For each, confirm that the going-concern assessment in the most recent audit file reflects the banking risk, that AML client risk ratings have been reviewed in light of any account closures, and that your digital asset accounting software captures on-chain transaction data in a format that supports the enhanced due diligence documentation that a bank or regulator may request. Firms should also update client acceptance and continuance procedures to include a specific question about banking stability as part of the annual risk review.
For CFOs Inside Digital Asset Businesses
Prepare a banking risk register that identifies every account held, the institution, the product type, and the contractual termination terms. Present this to the board and record the discussion in board minutes. Assess whether the current banking arrangements meet the liquidity requirements set out in the firm's twelve-month cash flow forecast. If they do not, document the contingency plan and ensure it is reflected in any going-concern note in the financial statements. Where the firm uses crypto accounting software or digital asset accounting software to manage transaction records, confirm that the output is reconciled to sterling bank statements and that any gaps in reconciliation are explained and documented.
Frequently Asked Questions
What is the Crypto and Digital Assets APPG?
It is an All-Party Parliamentary Group, a formally constituted cross-party group of MPs and peers with an interest in crypto and digital asset policy. APPGs can conduct inquiries, take written and oral evidence, and publish reports, but they do not legislate directly. Their reports carry political weight and are typically addressed by the relevant government departments and regulators.
Does FCA registration protect a crypto firm from de-banking?
No. FCA registration under the Money Laundering Regulations confirms that the firm has met the FCA's AML standards, but banks make independent commercial decisions about which clients they serve. A bank can decline or terminate an account for a registered crypto firm under its own risk policy. The APPG inquiry is specifically examining this gap between regulatory approval and commercial banking access.
What are the audit implications if a client is de-banked?
Auditors must assess the going-concern position of any client that faces material banking fragility. If the client has no viable alternative banking or liquidity arrangement, the risk may require disclosure in the financial statements or, in more serious cases, a modified audit opinion. Firms should document their going-concern assessment and the evidence reviewed, including the client's treasury contingency plan.
How should accounting firms treat de-banked crypto clients under AML rules?
De-banking alone does not automatically increase a client's AML risk rating, but it triggers a documented review. Firms must record why the banking difficulty does not alter the overall risk profile, or update the rating and apply enhanced due diligence if it does. Robust transaction records from digital asset accounting software or crypto bookkeeping software should be part of the file to demonstrate a clear audit trail.
What can CFOs do right now while the inquiry is ongoing?
Prepare a formal banking risk register, present it to the board, and ensure the going-concern note in the financial statements reflects current banking realities. Diversify banking relationships where possible, document treasury policy at board level, and consider whether the firm wishes to submit evidence to the APPG inquiry. The parliamentary process moves faster when it has concrete, documented examples of impact to work with.
Source: CoinDesk Policy