Posted by News Express | 6 February 2018 | 1,282 times
Banks in Britain and the United States have banned the use of credit cards to buy Bitcoin and other “crypto currencies.”
The banks are fearing a plunge in their value will leave customers unable to repay their debts.
Lloyds Banking Group Plc, Britain’s biggest lender, said on Monday it would ban its credit card customers from buying crypto currencies, following the lead of US banking giants JP Morgan Chase & Co and Citigroup.
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., the world’s second biggest payments network, said customers buying crypto currencies with credit cards fuelled one 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 US$19,187 on December 16 on the Luxembourg-based Bitstamp exchange.
But the biggest and best-known crypto currency has since fallen dramatically.
On Monday, it was down by six per cent to US$7,700 at 1100 GMT on Bitstamp, extending losses from Friday amid worries of a global regulatory clampdown.
A spokeswoman for Chase Bank said it was 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 extend 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 crypto currencies,” the Lloyds spokeswoman said in an email.
Lloyds did not say how it planned to enforce the ban, although the Media 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 Scotlanddeclined to comment on the bank’s policy.
Other leading British lenders including Barclays, and HSBC 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. (Reuters/NAN)
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