Major US banks to block purchases of cryptocurrencies
Things are always interesting in the cryptocurrency world, especially in how it’s received by the global banking sector. While some financial institutions are finally opening their eyes and accepting cryptocurrencies, three large US-based banks are stepping on the brakes. These entities will no longer allow cryptocurrency to be purchased with their credit cards.
Bank of America, Citibank and JP Morgan Chase have all put restrictions on their users’ credit cards to prohibit them from being used for buying digital currency. They blame the decision on the extreme market volatility the cryptocurrency market is experiencing. As legacy Bitcoin, otherwise known as SegWit1x (BTC), took a header last Friday and dropped $11,000, the financial giants felt obligated to step in to protect their clients.
The decision follows similar policies enacted by Capital One last month and by Discover in 2015. By blocking cryptocurrency purchases, customers are being saved from possibly making large, risky purchases, and scammers are prevented from buying someone’s tokens and then heading into the abyss. Additionally, as federal regulations require banks to monitor client transactions to prevent money laundering, the institutions have been struggling to comply since money is harder to track once it’s been converted into cryptocurrency.
BTC’s free-fall from $20,000 shows no signs of slowing down, and the conventional wisdom that the currency was not likely to dip back below $10,000 hasn’t held up. BTC alone has lost nearly $200 billion, while virtually all of the major cryptocurrencies are also seeing major losses recently.
India and China, as well as other countries, have taken steps to more rigorously control cryptocurrency exchanges, despite not showing the same level of interest in the past. Meanwhile, the Internal Revenue Service (IRS) has started collecting customer records from cryptocurrency exchanges to look for people that they feel might not be giving their due part to Uncle Sam.
There’s no need to break out the scissors and begin cutting up cards, however. All financial institutions have indicated that they will continue to monitor the evolution of the cryptocurrency world and will adjust policies as they see necessary. Also, the new ban won’t apply to all debit cards across the board.