Bitcoin

Big Banks Ban Bitcoin Purchases Using Credit Cards

Bitcoin

Bitcoin’s valuing is sinking and credit card companies are not helping, with the list of issuers banning bitcoin growing.

According to a report in The Wall Street Journal late last week, Citigroup said late Friday that it will no longer allow credit card customers to purchase bitcoin with a credit card issued by Citigroup. “We will continue to review our policy as this market evolves,” said a bank spokeswoman told The Wall Street Journal. Meanwhile, Bank of America and JPMorgan Chase said they, too, wouldn’t allow customers to purchase bitcoin with their credit cards anymore.  According to The Wall Street Journal, banks are growing more worried about the risks associated with customers using their credit cards to purchase cryptocurrency, namely bitcoin. A big concern is that bitcoin purchases will result in more card losses for the companies. Another concern is that credit card companies will have more fraud losses as a result of customers using them for bitcoin purchases. When there is fraud, it's the card issuer and/or the merchant that takes the hit. With more exchanges selling bitcoin, there is an increased risk of fraud for the credit card companies.  Capital One has been preventing customers from doing that since January, while Discover Financial banned it back in 2015.

The move on the parts of the banks come as digital currencies have faced regulatory scrutiny from governments around the world, which has put pressure on bitcoin’s value. In late January, for example, news surfaced that the U.S. Securities and Exchange Commission (SEC) filed a complaint against a Dallas-based financial firm seeking to launch what might be the largest initial coin offering (ICO) in history. The complaint stated that “the ICO is an illegal offering of securities because there is no registration filed or in effect with the SEC, nor is there an applicable exemption from registration.”  In South Korea, police and tax authorities have reportedly been raiding local exchanges on alleged tax evasion charges — and the country has gone back and forth on whether it will ban the cryptocurrency altogether.

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