Banks in Britain and U.S. ban Bitcoin buying with credit cards

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Banks in Britain and U.S. ban Bitcoin buying with credit cards

Lawrence White, Emma Rumney

 

Representation of the Bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018. REUTERS/Dado Ruvic/Illustration

 

(Reuters) - Banks in Britain and the United States have banned the use of credit cards to buy Bitcoin and other “crypto currencies”, fearing a plunge in their value will leave customers unable to repay their debts.

 

Lloyds Banking Group Plc (LLOY.L), Britain’s biggest lender, said on Sunday it would ban its credit card customers from buying crypto currencies, following the lead of U.S. banking giants JP Morgan Chase & Co (JPM.N) and Citigroup (C.N).

 

The move is aimed at protecting customers from running up huge debts from buying virtual currencies on credit, if their values were to plummet, a Lloyds spokeswoman said.

 

Concerns have arisen among credit card providers because their customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to purchase the digital currencies.

 

Last week Mastercard Inc (MA.N), the world’s second biggest payments network, said customers buying crypto currencies with credit cards fueled a 1 percentage point increase in overseas transaction volumes in the fourth quarter.

 

At that time Bitcoin was staging a spectacular rise in value, reaching a peak of $19,187 on Dec. 16 on the Luxembourg-based Bitstamp exchange.

 

But the biggest and best-known crypto currency has since fallen dramatically and on Monday was down by 6 percent to $7700 at 1100 GMT on Bitstamp, extending losses from Friday amid worries of a global regulatory clampdown.

 

A spokeswoman for Chase bank said it is not currently processing credit card purchases of crypto currencies because of the volatility and risk involved, while a Citi spokeswoman confirmed a similar ban, but did not give a reason.

 

The bans extends only to credit card purchases, with debit card users still able to buy crypto currencies.

 

“Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies,” the Lloyds spokeswoman said in an email.

 

Lloyds did not say how it planned to enforce the ban, although the Telegraph newspaper reported on Sunday that its credit card customers will be blocked from buying Bitcoin online through a “blacklist” that will flag sellers.

 

A spokeswoman from the Royal Bank of Scotland (RBS.L) declined to comment on the bank’s policy.

 

Other leading British lenders including Barclays (BARC.L), and HSBC (HSBA.L) did not immediately respond to requests for comment on whether they permit credit card purchases of crypto currencies or had any plans to change their policies.

 

Concerns about the use of Bitcoin and other such currencies extend beyond the use of credit cards for borrowing.

 

British Prime Minister Theresa May has said Britain should take a serious look at digital currencies such as Bitcoin because of the way they can be used by criminals.

 

-- © Copyright Reuters 2018-2-5

[Calach]

Seems like quite a reasonable thing for a bank to do, preventing people from getting into debt to speculate on such extremely volatile assets. 

[pokerface1]

16 hours ago, Calach said:

Seems like quite a reasonable thing for a bank to do, preventing people from getting into debt to speculate on such extremely volatile assets. 

Agreed however I think most governments of the world don't want digital currencies as they cannot monitor the money trail which is of paramount concern for obvious reasons. The big sell off has played right into their hands on the other hand the massive rise was fueling the legitimacy causing many financial institutions to jump on board or miss out.

Looks to me like the governments have enlisted the bank to help do their dirty work for them.It will be interesting to see what the next move will be and how it will further the end of digital currencies.