British and US banks ban bitcoin buying with credit cards

Banks in Britain and the US have banned the use of credit cards to buy bitcoin and other cryptocurrencies, fearing a plunge in their value will leave customers unable to repay their debts.

Britain’s biggest lender, Lloyds, said on Sunday it would ban its credit-card customers from buying cryptocurrencies, following the lead of US banks JP Morgan Chase and Citigroup.

The move was aimed at protecting customers from running up huge debt in buying virtual currencies on credit, if their values were to plummet, said a Lloyds spokeswoman.

Concern has arisen among credit-card providers because customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to buy digital currencies.

Mastercard, the secondbiggest payments network, said last week that customers buying cryptocurrencies with credit cards fuelled a one percentage point rise in overseas transaction volumes during the fourth quarter last year.

At that time, bitcoin was staging a spectacular rise in value, reaching a peak of $19,187 on December 16 on the Bitstamp exchange in Luxembourg.

But the biggest and bestknown cryptocurrency has since fallen dramatically, and on Monday was down 6% at $7,700 on Bitstamp, amid fear about a global regulatory clampdown.

A spokeswoman for Chase bank said that it was not processing credit-card purchases of cryptocurrencies because of the volatility and risk involved. A Citi spokeswoman confirmed a similar ban.

The ban extends only to credit-card purchases. Debitcard users can still buy cryptocurrencies.

“Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies,” the Lloyds spokeswoman said. Lloyds did not say how it planned to enforce the ban, although the Telegraph newspaper reported on Sunday that its credit-card customers would be blocked from buying bitcoin online through a black list that would flag sellers.

A spokeswoman of the Royal Bank of Scotland declined to comment on the bank’s policy.

Other leading British lenders including Barclays and HSBC did not immediately respond to requests for comment on whether they permitted credit card purchases of cryptocurrencies or had any plans to change their policies.

Concern about the use of bitcoin and other such currencies extends beyond the use of credit cards for borrowing.

British Prime Minister Theresa May has said Britain should take a serious look at digital currencies such as bitcoin because of the way they can be used by criminals.

THE MOVE PROTECTS CUSTOMERS FROM RUNNING UP HUGE DEBT IN BUYING VIRTUAL CURRENCIES ON CREDIT