Crypto didn’t move from outlaw to “strategic asset class” overnight. But if you zoom out, the shift is obvious. Banks that once treated Bitcoin like contraband are now piloting tokenized bonds. Custody desks are being built. Lawmakers talk about “digital asset hubs” without flinching.
And yet.
Talk to actual users and founders, and you hear the same story on repeat: accounts frozen, transfers flagged, funds stuck in limbo with no clear explanation. Three days. Two weeks. Sometimes longer.
That tension isn’t a contradiction. It’s a structural mismatch. Banks run on risk engines built for identity-linked, narrative-heavy fiat transactions. Blockchains run on pseudonymous addresses and transparent but context-light transfers. Until those two systems actually understand each other, the friction won’t disappear — no matter how many tokenized bond pilots get announced.
The Freeze Is Still the Default Move
Panos Mekras, co-founder and CEO of Anodos Labs, ran into this wall years ago in Greece. Back then, transfers to crypto exchanges were routinely blocked. Card payments? Declined. When one bank finally allowed a transfer, it came with a lecture: are you sure you understand you’re dealing with a “risky” counterparty?
Fast-forward several years. Different environment. More institutional acceptance. Same friction.
Mekras tried moving funds from an exchange to Revolut. The result? His account was frozen for three weeks. No access. No partial workaround. Just waiting.
You can say these cases are edge incidents. But I’ve heard versions of this story across jurisdictions — the UK, parts of Europe, even in the US during peak regulatory tension. Once crypto is detected in the transaction chain, automated systems light up.
From the bank’s point of view, that’s not hostility. It’s risk containment.
From the user’s point of view, it’s existential. When your account is frozen, the statistical rarity of that freeze doesn’t matter. It’s 100% of your liquidity.
The UK Numbers: This Isn’t Just Anecdote
A January report from the UK Cryptoasset Business Council put numbers behind what users have been saying quietly for years. Around 40% of bank transfers to exchanges encountered restrictions or delays. Eighty percent of exchanges reported increased friction over the past year.
That’s not noise. That’s systemic.
What’s more interesting is that these restrictions were often blanket measures — transaction caps, outright bans, or generalized “crypto risk” flags — without granular differentiation between regulated exchanges and sketchy offshore platforms.
Revolut stood out in the study as one of the few institutions allowing both bank transfers and debit card usage for crypto. And yet it’s also the platform where Mekras experienced a prolonged freeze.
A Revolut spokesperson framed freezes as a last-resort measure triggered by AML and KYC systems, noting that since Oct. 1, only 0.7% of accounts depositing crypto funds were restricted after investigation.
That sounds small. And statistically, it is.
But here’s the thing: risk models operate on aggregate probabilities. Human lives operate on binary outcomes. You’re either locked out or you’re not.
The Real Problem Isn’t Bias. It’s Tooling.
It’s tempting to frame this as anti-crypto bias. Sometimes that’s part of it. More often, it’s a tooling gap.
Eyal Daskal, CEO of Crymbo, has been blunt about this: most banks simply don’t have the internal infrastructure to interpret blockchain data in a way that slots neatly into existing compliance frameworks.
Traditional risk engines are built around:
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Account history
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Named counterparties
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Transaction descriptions
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Sanctions databases
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Jurisdictional flags
Blockchains don’t work like that. Wallet addresses don’t come with built-in narratives. To connect a transaction to a risk category, you need specialized analytics: clustering tools, attribution engines, onchain risk scoring.
If those systems aren’t deeply embedded in the bank’s core compliance stack, crypto activity gets treated as “out of scope.”
And when something is out of scope in compliance? You block first. Ask later.
That logic is cold. It’s also rational. The cost of missing illicit activity is enormous — regulatory penalties, reputational damage, sometimes criminal liability. The cost of freezing a legitimate account for two weeks is usually limited to customer frustration.
So the system errs toward caution. Repeatedly.
The US: Politics Enter the Chat
In the United States, the friction took on a political label. “Operation Chokepoint 2.0.” The phrase echoed the original Operation Choke Point, when enforcement agencies were accused of nudging banks away from politically sensitive industries.
By late 2024 and into early 2025, crypto firms were openly accusing regulators of informal debanking pressure. The debate intensified after Donald Trump returned to office in January 2025 with a pro-crypto stance.
Federal agencies responded. The Office of the Comptroller of the Currency reviewed debanking practices across nine major banks and issued interpretive guidance clarifying that banks may facilitate crypto transactions in a broker-like capacity.
Crypto was explicitly named among sectors examined for potential debanking patterns.
That’s a significant shift. It’s regulatory recognition that friction exists.
But here’s the catch: guidance doesn’t automatically rewire compliance software. Banks don’t flip a switch and suddenly become comfortable with blockchain flows. Internal risk policies evolve slowly, and usually conservatively.
Look at the Extremes: China and Nigeria
If you want to see what happens when formal access disappears, look at China. Official on- and off-ramps are banned. Activity didn’t vanish. It went peer-to-peer. Informal. Harder to monitor.
Nigeria tells a different story. After restricting crypto and clamping down on peer-to-peer platforms, it recognized digital assets as securities in 2025. Formal recognition eased some pressure, but trust between banks and crypto businesses didn’t instantly reset.
The lesson is simple: when formal rails close, crypto doesn’t evaporate. It migrates. Often into murkier channels.
That’s not what regulators want. But it’s what happens.
Meanwhile, Institutions March Forward
Zoom out and the institutional picture looks almost serene.
In the US, most of the top 25 banks are offering or exploring Bitcoin-related services — custody, trading desks, advisory products. Europe’s MiCA framework has opened regulated lanes for custody and settlement. In the UK, HSBC selected a blockchain platform for pilot issuances of tokenized government bonds.
If you only read headlines, you’d think integration is nearly complete.
It’s not.
The difference is segmentation. Institutional desks operate within bespoke compliance channels. They have dedicated reporting structures, negotiated risk frameworks, and teams that understand blockchain analytics.
Retail users operate through standardized consumer banking systems designed for scale. Those systems default to broad risk categories, not nuanced assessments.
That’s the gap.
Why Freezes Persist Even as Regulation Softens
Three structural forces keep the freeze button close at hand.
Asymmetric risk.
Facilitating illicit flows brings regulatory punishment. Freezing a legitimate account rarely does. The incentive is obvious.
Fragmented tooling.
Not every bank has fully integrated blockchain analytics. Address screening and transaction clustering require specialized vendors and trained staff. Integration takes time and budget.
Operational simplicity.
It’s easier to block an account than to conduct a granular blockchain investigation. When in doubt, simplicity wins.
Until those incentives shift, retail friction will remain — even if institutional adoption accelerates.
“Just Go Onchain” Isn’t a Full Answer
For users who’ve had enough, the instinct is to go fully onchain. Self-custody wallets don’t freeze funds. Smart contracts don’t ask for ID in the same way. The rails are always on.
That works — to a point.
But most people don’t live in a purely crypto-native bubble. Taxes are paid in fiat. Rent is paid in fiat. Salaries, suppliers, utilities — all fiat.
The fiat bridge remains critical. And banks still control that bridge.
So even the most crypto-native user remains tethered to traditional financial infrastructure.
The Infrastructure Gap Is the Real Story
Strip away the politics and the anecdotes, and the issue is interpretability.
Banks monitor identity-linked accounts. Blockchains expose address-linked flows. Bridging those worlds requires:
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Reliable wallet attribution
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Shared risk scoring standards
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Interoperable reporting between exchanges and banks
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Clear regulatory safe harbors
Without those, crypto transactions look ambiguous. And ambiguity, in compliance systems, equals risk.
As long as ambiguity equals risk, precautionary freezes will continue.
This Is Sequencing, Not Hypocrisy
It’s easy to frame this as hypocrisy: institutions are welcomed, retail is penalized.
I don’t think that’s quite right.
Institutions integrate first because they can adapt compliance frameworks at a bespoke level. Retail banking operates on standardized risk models applied across millions of users.
The sequencing makes sense from a systems perspective. It just feels unfair from a user perspective.
Both can be true.
What Actually Closes the Gap
Political rhetoric helps. It doesn’t solve the plumbing.
What would move the needle is deeper integration of blockchain analytics into core banking systems. Clear thresholds distinguishing routine exchange transfers from genuinely suspicious flows. Standardized reporting channels between regulated exchanges and banks.
In other words: context.
If crypto exposure stops being treated as a categorical red flag and starts being evaluated as a contextual variable, freezes will become rarer — and more targeted.
Until then, we’re stuck in coexistence mode.
Crypto can be mainstream at the institutional layer while still feeling precarious at the retail layer. Both realities can exist at the same time.
And for now, they do.
Disclaimer
This article is for informational and educational purposes only and does not constitute financial, investment, trading, or legal advice. Cryptocurrencies, memecoins, and prediction-market positions are highly speculative and involve significant risk, including the potential loss of all capital.
The analysis presented reflects the author’s opinion at the time of writing and is based on publicly available information, on-chain data, and market observations, which may change without notice. No representation or warranty is made regarding accuracy, completeness, or future performance.
Readers are solely responsible for their investment decisions and should conduct their own independent research and consult a qualified financial professional before engaging in any trading or betting activity. The author and publisher hold no responsibility for any financial losses incurred.