Banks Banning Credit Cards Purchases of Cryptocurrencies

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Banks ban cryptocurrency purchases with credit

Banks in both the United States and Britain have banned the use of credit cards to purchase Bitcoin and other digital assets, with the concerns that if their value drops customers will not be able to pay their debts.

Britain’s Lloyds Banking Group Plc and Virgin Money stated they would ban credit card customers from purchasing cryptocurrencies, following the lead of U.S. banks JP Morgan Chase & Co and Citigroup.

This is to protect their customers from accruing large debts from buying cryptocurrencies on credit cards, if their value were to significantly fall, according to a Lloyds spokeswoman.  These concerns are rising among credit providers as their customers are increasingly using their credit to fund accounts on online cryptocurrency exchanges.

On Monday, other banks said they will continue to permit their customers to purchase cryptocurrencies.

“We constantly review our protections for customers as a responsible bank and lender, and are keeping this matter under close review,” said a spokesperson from Barclays, Britain’s leading credit card issuer.  “At present UK customers can use both their Barclays debit card and Barclaycard credit card to purchase cryptocurrency legitimately.”

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A spokesperson for Chase bank stated that the company is not currently processing credit card purchases of cryptocurrencies due to its volatility and a spokeswoman for Citi verified a similar ban.  The bans apply to credit card purchases, with debit card users having full permission to purchase these digital assets.

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

Lloyds did not disclose how it plans to implement the ban, although it was reported in the paper on Sunday that its credit card customers will be blocked from purchasing Bitcoin online through a “blacklist” that will flag sellers.

The largest as well as best-known cryptocurrency has lost much of its value.  On Monday it was down by 11 percent to $7255 at 1719 GMT on Bitstamp exchange, adding to Friday’s losses.

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