Trading cryptocurrencies will become a little harder for some people, as 3 large U.S. banks have indicated that they will no longer allow credit card holders to make cryptocurrency transactions with their cards.
Bank of America, Citicorp and JP Morgan Chase have all said that they will from now on block cryptocurrency transactions made on credit cards they issue. Though Betty Riess, who is a spokesperson for Bank of America, has said that while her bank will ban cryptocurrency transactions made on personal and business credit cards, they will still allow customers to make such transactions with their debit cards.
According to Bloomberg, the 3-bank prohibition comes on the heels of Discover and Capital One making similar prohibitions against cryptocurrency transactions made on their credit cards.
Cryptocurrencies are becoming a big problem for financial institutions, as credit card holders that have been buying the currencies are having increasing difficulties paying their balances. Another problem many banks are experiencing is that stolen cards are often being used to purchase digital currencies, and these transactions are not traceable. A third issue is that the banks fear that the cryptocurrencies are being used for the purposes of money laundering, which is something they are required to monitor.
Mary Jane Rogers, who is a spokesperson for JP Morgan Chase, said that the bank began declining cryptocurrency transactions on Saturday, and she in particular cited the credit risks associated with digital currencies as being the reason. Bank of America indicated that their cryptocurrency ban began on Friday.
Jennifer Bombardier, who is a spokesperson for Citicorp, said that, while they have banned cryptocurrency transactions made on their cards, they are still reviewing their policies toward cryptocurrencies and that their policies could change in the future.
On Friday, bitcoin fell below $8,000, and since December it has lost more than half of its market value. Other cryptocurrencies have fallen in a similar fashion. The losses have occurred in the wake of the threat of increased government regulation of cryptocurrencies. They have also been hurt by Facebook’s ban on cryptocurrency advertising. The elimination of credit card purchases of cryptocurrencies could further hasten their decline.