Major Banks Ban Credit Purchase of Bitcoin and Other Cryptocurrency
Major banks are now favoring the idea of keeping their customers away from bitcoin and other cryptocurrencies, and the unpredictable market associated with them. Credit card issuers in the U.S. have now banned the buying of cryptocurrencies.
The relatively recent boom in cryptocurrency speculation has driven many credit card holders to use their credit cards as a way to gain access to bitcoin and other currency, mainly using loans.
Bitcoin and other cryptocurrencies have now dropped so much in value as compared to their December levels, that many of these loans are now leaving their owners at a loss, according to Fortune.
In a bid to cut down on legal and financial risks, banks like JPMorgan has since blocked cryptocurrency purchases using their credit cards, starting Saturday, Feb. 3. Bank of America has also instituted a similar ban since before the weekend as well.
Other banks, including Citigroup, have followed suit, making similar restrictions on buying bitcoin and other cryptocurrencies on credit. Capital One has also made the same policy changes, as well as Discover.
Overall, the top five credit card service providers have either announced a cryptocurrency ban or have already implemented one.
Major credit card networks and lending service providers have also shifted towards treating cryptocurrency sales as cash advances, which means users incur higher interest rates and fees, according to Engadget.
Lenders can be left with the bad debts if customers are not able to repay their loans, especially from those incurred while buying into bitcoin and cryptocurrency offers, as Bloomberg pointed out. The increasing cases of identity theft and credit card abuse open these lending services as another avenue for criminals to profit from, too.
Credit card issuers and banks are also required by law to report attempts at money laundering, and with untraceable value stores like bitcoin, going after money launderers can be a headache for them.
