Bitcoin banned on credit cards? Banks oppose cryptocurrency
Another serious blow was dealt to cryptocurrency traders around the world, this time by the big banks.
Over the weekend, U.S. banks Bank of America, Citigroup, JPMorgan Chase, Capital One and Discover said they were no longer accepting purchases from bitcoins or any other cryptocurrency on their credit cards. Major UK banks have taken a similar step, including Lloyd Banking Group and Virgin Money.
Most of these financial institutions cited the high risk involved in trading cryptocurrencies as the reason for this decision. A spokesperson for JPMorgan said Bloomberg that the bank was implementing this ban because it does not want the credit risk associated with digital currency transactions.
While the number of banks that quickly adopted this new policy may come as a shock, there have been recent signs that a ban like this was coming.
On February 1, a team member from Coinbase, the world’s largest cryptocurrency exchange, revealed on Reddit that major credit card issuers had changed the rules for buying tokens.
“Recently, the MCC code for digital currency purchases has been changed by a number of major networks and credit card providers,” writes Redditor, Coinbase-Olga. “This new code will allow some banks and card issuers to charge additional cash advance fees.”
Many exchange sites offer investors the option of transferring funds to their accounts using credit cards. Many people choose to use credit cards instead of debit cards because they are responsible for much less money if their card information has already been stolen. So, cryptocurrency newbies can feel more secure using a credit card compared to other methods.
These new banking policies will limit the options people have for getting into digital currency trading, potentially reducing the number of people investing in general.
The bans have just been put in place, so it’s hard to say exactly how they will affect the market in the long run. But as of this writing, the cryptocurrency market is inundated with a sea of red. Bitcoin briefly dipped below $ 7,000 for the first time since November 2017, although it hit $ 7,183 at the time of writing
It’s too early to say whether this was directly caused by these big banks restructuring their terms – lingering concerns about Tether may be the biggest factor – but it’s probably part of the bigger picture.