Banks in Britain, U.S. ban Bitcoin buying with credit cards

Banks in Britain and the U. S. have banned the use of credit cards to buy Bitcoin and other “crypto currencies”.

The banks are fearing a plunge in their value will leave customers unable to repay their debts.

Lloyds Banking Group Plc , Britain’s biggest lender said on Monday it would ban its credit card customers from buying crypto currencies, following the lead of U.S. banking giants JP Morgan Chase & Co and Citigroup.

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

Concerns have arisen among credit card providers because their customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to purchase the digital currencies.

Last week Mastercard Inc., the world’s second biggest payments network, said customers buying crypto currencies with credit cards fuelled one percentage point increase in overseas transaction volumes in the fourth quarter.

At that time Bitcoin was staging a spectacular rise in value, reaching a peak of 19,187 dollars on Dec. 16 on the Luxembourg-based Bitstamp exchange.

But the biggest and bestknown crypto currency has since fallen dramatically.

On Monday, it was down by six per cent to 7,700 dollars at 1100 GMT on Bitstamp, extending losses from Friday amid worries of a global regulatory clampdown.

A spokeswoman for Chase bank said it was not currently processing credit card purchases of crypto currencies because of the volatility and risk involved, while a Citi spokeswoman confirmed a similar ban but did not give a reason.

The bans extend only to credit card purchases with debit card users still able to buy crypto currencies. (Reuters/ NAN)