Banks ban credit purchase of cryptocurrency due to risks

Meath must wait to take on rivals Westmeath

Lloyds Banking Group will on Monday tell its 9 million credit card customers that it will block any attempts to buy Bitcoin after the digital currency lost more than half its value in just two months.

Other cryptocurrencies have also fallen in the last few weeks after soaring, sometimes even far more than bitcoin, last year.

The company fears that credit card owners will buy Bitcoin hoping to make a profit when its value goes up, but will be laden with debt if its price falls, the paper reported.

Some of the world's largest banks announced on Friday that customers are now prohibited from buying cryptocurrencies with credit cards, citing market volatility.

JPMorgan spokesperson Mary Jane Rogers said the bank has made a decision to impose a restriction on crypto purchases, because it doesn't want to deal with the risks associated with it.

The bank, based in Charlotte, N.C., "will begin declining credit card transactions with known cryptocurrency exchanges", according to a memo sent to staff Friday.

Credit card customers of the bank will be blocked from buying Bitcoin online through a blacklist that will flag sellers. It doesn't affect debit cards, said company spokeswoman Betty Riess.

Bank of America and JPMorgan Chase will reportedly no longer enable customers to purchase bitcoin with credit cards starting in February, reports say. "We will review the issue as the market evolves".

Allowing purchases of cryptocurrencies can create big headaches for card lenders, which can be left on the hook if a borrower bets wrong and can't repay. In addition to the difficulties of keeping an eye on purchases - something they're required to do - associated with crypto-coins, there's also always the risk of somebody buying more than they can afford to pay.

Related:

Comments


Other news