Wednesday, 12 December, 2018

Two US banks ban Bitcoin transactions on credit cards

Jamie Dimon Chairman and CEO of JPMorgan Chase & Co. speaks during the Milken Institute Global Conference in Beverly Hills California U.S Jamie Dimon Chairman and CEO of JPMorgan Chase. Thomson Reuters
Nellie Chapman | 05 February, 2018, 09:27

The bank fears customers are buying Bitcoin on credit cards in the hope that they will make a profit when the value goes up, but overlook the fact they will be laden with debt when the price falls.

The banking giant, which includes Halifax, MBNA and Bank of Scotland, is thought to be the first in the United Kingdom to ban credit card customers from borrowing to buy the cyptocurrency, which has more than halved in value in recent months.

Lloyds's decision followed the lead of several big USA banks that last week banned credit card payments on Bitcoin as its price tumbled to a three-month low.

Concerns also continue to grow that Bitcoin and other cryptocurrencies are being used by criminals for drug dealing and money laundering. JPMorgan, which will implement the ban Saturday, doesn't want the credit risk associated with the transactions, said Mary Jane Rogers, a spokeswoman for the firm.

Bank of America started declining credit card transactions with known crypto exchanges on Friday.

A Bank of America spokesperson also said in an email that the bank has made a decision to decline credit card purchases of cryptocurrencies.

A spokeswoman for the banking group said: "Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies". "We will review the issue as the market evolves".

The drop in the currency's value occurred amid escalating regulatory threats around the world, fear of price manipulation and Facebook's ban on ads for cryptocurrencies and initial coin offerings.

Moreover, there's also the risk that thieves will abuse cards that were purloined or based on stolen identities, Bloomberg noted. Cryptocurrencies can also be hard for banks to monitor, which are required to look out for signs of money laundering.