A Top Citi Exec’s Warning and Barclays’ Ban Reveal a Stark Divide On Crypto

• Citigroup’s UK CEO has warned against “prohibitive” new crypto regulations for banks
• The warning comes as Barclays announces a total ban on crypto credit card transactions
• This highlights a growing divide among major banks on how to approach the digital asset class

The battle between innovation and regulation took center stage at TheCityUK’s annual conference this week, where Citigroup UK CEO Tiina Lee made an urgent appeal: let regulated banks back into crypto–or risk pushing the fast-evolving asset class further into the shadows.

Speaking to an audience of financial leaders and policymakers in London, Lee criticized the Basel Committee’s upcoming global standards, which categorize cryptocurrencies as among the riskiest assets a bank can hold. 

The new framework, set to take effect next year, imposes a 1,250% risk weight on banks’ crypto holdings, meaning institutions would have to hold £125 in capital for every £100 of crypto they carry on their books. Calling the approach “prohibitive”, Lee questioned whether such stringent restrictions are truly in the public interest. Per Bloomberg, she asked:

“So as we think about how fast this market is moving, is that something that actually, as an industry, we want in the non-regulated sphere, or is it better that it’s supervised appropriately, with the right oversight?” 

Related: CitiBank Closes Ripple CEO’s Account Citing Crypto Ties

Too Risky to Regulate — or Too Risky Not To?

Lee stated that overly harsh regulations could backfire, driving crypto activity underground into poorly regulated or opaque financial channels. 

The Basel capital rules are widely criticized by banks and industry groups alike for being blunt instruments, deterring legitimate financial institutions from participating in the digital asset ecosystem, while doing little to eliminate systemic risk.

Related: The Biggest Banks in South Korea Team Up to Create a New Crypto

A Lawsuit Clouds Citi’s Crypto Position

Lee’s defense of crypto also comes at a tricky time for Citibank. This week, the bank was sued for negligence in a US federal court by Michael Zidell, a man who lost $20 million to a pig butchering-style romance scam. 

Zidell claims Citi failed to flag suspicious transactions totaling nearly $4 million, enabling scammers to drain funds through multiple accounts. The complaint alleges the bank ignored clear warning signs, such as large, round-number transfers and suspicious account behavior. Zidell accuses Citi of aiding and abetting fraud through inaction and poor oversight.

While unrelated to the Basel debate, the case has revived questions about whether large banks are doing enough to monitor crypto-adjacent fraud.

Barclays Takes a Step Back

In sharp contrast to Citi’s call for inclusion, UK-based Barclays Bank has taken a much more restrictive stance. This week, Barclays announced it will block all crypto-related credit card transactions starting today, June 27, 2025.

Citing the “volatile nature” of cryptocurrencies and the risk of unaffordable debt, Barclays’ move signals a growing divide among banks on how to approach the sector. 

While Barclays shields itself from reputational and financial risk, critics argue such blanket bans only encourage consumers to turn to less secure, non-bank alternatives to access crypto.

Tiina Lee’s message is clear–keeping crypto within the bounds of regulated finance is better than driving it into the wild west. With regulators, banks, and customers all navigating the growing pains of digital asset adoption, the stakes are high.