Major Banks Ban Cryptocurrency Purchases on Credit Cards

Major Banks Ban Cryptocurrency Purchases on Credit Cards

Trading in cryptocurrencies is all the rage lately, but it’s not without risk. In fact, the risk is substantially higher than just about anything else you can do with your money. Banks are starting to put the brakes on the crypto hype train, though. Over the last several days, several major banks have announced their credit cards will no longer support purchasing cryptocurrency.

Starting on Friday evening, Bank of America, Citigroup, and JPMorgan Chase began blocking transactions to known cryptocurrency marketplaces. As the new week got underway, users of cards backed by the UK’s Lloyds Banking Group found they, too, were prohibited from buying cryptocurrency on credit.

When reached for comment by PCMag, all the banks told different versions of the same story: The banks don’t want customers charging crypto purchases because it’s volatile and a high credit risk. I’m sure banks are also concerned there’s no way to repossess virtual coins if they’ve been stashed in an anonymous wallet.

The volatility argument is certainly holding water right now. Bitcoin, the most widely known and used cryptocurrency, has been dropping like a rock lately. It peaked at around $20,000 per one Bitcoin in December, but it’s now hovering around $7,000. Other coins like Ethereum and Litecoin are following Bitcoin on a downward trend for the last few weeks. Anyone who bought near the top of the market as crypto hysteria was taking over is probably hurting right now.

Bitcoin price over the last month.
Bitcoin price over the last month.

This ban won’t stop determined individuals from buying Bitcoin. The banks have only instituted the prohibition on credit cards. So, you can still do whatever you want with your debit card or with a direct link to your bank account. It’s also possible to buy gift cards with a credit card like you would before a birthday party for someone you don’t know very well. Instead of giving it to your friend of a friend, you sell it to one of the many online services that exchange gift cards for Bitcoin. The banks are just adding a few barriers that make it harder to buy virtual money on credit.

The largest sellers of virtual currency are in the process of notifying customers of these changes. They suggest adding a debit card to accounts in order to continue buying and selling. Although, some people who have been losing big as cryptocurrencies drop might take this as a sign to cut their losses. One upshot: maybe we’ll be able to buy GPUs again soon.