Top Five Credit Card Issuers Ban Cryptocurrency Purchases
February 27 2018 - 10:49AM
InvestorsHub NewsWire
Bitcoin Global News (BGN)
February 27, 2018 -- ADVFN Crypto NewsWire -- The top five U.S.
credit card issuers have banned cryptocurrency purchases using
credit cards, blocking transactions at all known cryptocurrency
marketplaces including as Coinbase, Kraken, and Binance.
J.P. Morgan Chase's spokesperson echoed nearly identical
statements from Bank of America, Citi, Capital One, and Discover,
saying "At this time, we are not processing cryptocurrency
purchases using credit cards, due to the volatility and risk
involved. We will review the issue as the market evolves." Debit
card cryptocurrency purchases will still be allowed by all
banks.
Thousands of Americans have been using their credit cards to buy
cryptocurrencies. The majority of this buying was done just prior
to the recent cryptocurrency valuations crash, leaving those
investors deep underwater.
The barring of cryptocurrency credit card purchases is expected
to quickly expand to European and Asian credit card issuing
banks.
Here are the main risks banks face with this new form of leveraged
investing:
-
Increased credit card default rates where banks are left on the
hook when borrowers bet wrong and cannot repay.
-
“Get something for nothing” chargeback attempts made after
buying cryptocurrency with a credit card.
-
Heightened incentivization for thieves to steal or obtain credit
cards fraudulently using stolen identities and then quickly turning
the cards into untraceable crypto hoards.
-
Regulatory and fiduciary liabilities should a large part of this
new behavior be found to be related to money laundering.
The credit card ban is part of a growing array cryptocurrency
investment control measures being considered and/or implemented by
both lenders and regulators. This movement should help mitigate the
consequences of the hype that has recently threatened to overshadow
the underlying promise of blockchain technology. But many
cryptocurrency investors will probably feel that another risk
mitigation tactic, where banks are now blocking wire transfers to
and from cryptocurrency exchanges, is going a step too far.
Though all card issuing banks will soon have in place basic
barriers to buying cryptocurrency with credit cards, credit card
holders determined to use their cards to buy cryptocurrency are
already using a workaround. They buy a gift card, usually an Amazon
gift card, with their credit card, then sell the gift card to one
of the many online services that exchange gift cards for Bitcoin
such as paxful.com.
By: BGN Editorial Staff
Ethereum Classic (COIN:ETCUSD)
Historical Stock Chart
From Apr 2024 to May 2024
Ethereum Classic (COIN:ETCUSD)
Historical Stock Chart
From May 2023 to May 2024