nenforceable” bans by banks on cryptocurrency purchases fail to protect consumers and appear to put lenders’ interests first, experts have said. Lloyds Banking Group, which includes Lloyds, Bank of Scotland, Halifax and credit card provider MBNA, said in February that it was banning the purchase of cryptocurrencies via its credit cards.
The ban was introduced to protect the group’s 30 million customers from wild price swings in digital currencies such as Bitcoin, which soared in value last year to roughly $20,000 (£15,700) each but has since plummeted to less than $4,000. Credit providers in America also implemented bans, while in Britain, Virgin Money followed suit.
However, the banks are struggling to keep pace with the rapid rise in cryptocurrency exchanges and spread betting websites that advertise digital currency investments, it has emerged.
There is no one specific and recognised industry transaction code for cryptocurrency and it depends
on whether the vendor is listed on a bank’s “blacklist” for transactions to be blocked. These lists are monitored and updated manually on an ad hoc basis and include some of the better known exchanges such as Coinbase, Telegraph Money understands, but are far from foolproof.
The hysteria surrounding Bitcoin in particular has led to the rise of investment scammers who use fake websites and trading companies to con people out of their savings, making the sector even harder to police. As a result, some transactions have managed to slip through the net.
Michael Merriman, 77, one of roughly three million MBNA credit card customers, lost about £30,000 to a suspected crypto scam after someone cold-called him and persuaded him to buy digital currencies through AAA Trade, a spread betting website. The site is authorised in the EEA (European Economic Area) and invites people to “join the crypto revolution” by allowing them to buy and sell more than 50 different digital currencies through its platform. Mr Merriman made a number of deposits on the site