LONDON, June 15 (Reuters) - A cryptocurrency exchange in the UK has struck a rare deal to open a bank account with British start-up ClearBank, said two people familiar with the matter, allowing domestic customers to trade digital currencies without moving their money overseas.
Mainstream British and other European lenders have largely shunned cryptocurrencies, which have come under increasing scrutiny from regulators.
ClearBank is a purpose-built clearing bank launched in 2017 by Nick Ogden, the founder of payments group Worldpay.
The sources said it has reached a deal with London Block Exchange, one of the UK's better-known digital wallet providers.
"This will make it easier for British customers of the exchange to buy and sell cryptocurrencies by making transactions faster and cheaper," said one person with knowledge of the agreement who declined to be named.
London Block Exchange said in March it would offer its clients on-shore accounts and access to the Faster Payments Service, a network used by the traditional financial industry.
The exchange and ClearBank both declined to comment on Friday.
Traditional lenders have been reluctant to do business with companies that handle bitcoin and other digital currencies because of money laundering concerns and prospects of a regulatory crackdown.
San Francisco-based exchange Coinbase did however strike a deal in March to open a bank account with Britain's Barclays .
Companies that handle cryptocurrencies have been forced to open accounts outside Britain - notably in Gibraltar, Poland and Latvia - and transfer pounds into euros or other currencies. That has raised questions about the UK's ambition to become a global hub for the fast-growing fintech industry.
Big lenders have also limited their customers' ability to buy cryptocurrencies because of fears that a plunge in their value will leave debts unpaid.
ClearBank was set up as a clearing bank offering services to building societies, credit unions and fintech firms that have retail banking needs such as opening current accounts. (Reporting by Tom Finn: Editing by Tommy Wilkes and John Stonestreet)