Banks in UK, US ban use of credit cards to buy Bitcoin
05 February 2018
Banks in the UK and the US have banned the use of credit cards to buy Bitcoin and other ''crypto currencies'', fearing customers will be left unable to repay their debts in case of a plunge in their value.
Lloyds Banking Group Plc, the UK's biggest lender, said yesterday that it would ban its credit card customers from buying crypto currencies, following the ban by US banking giants JP Morgan Chase & Co and Citigroup.
According to a Lloyds spokeswoman, the move is aimed at protecting customers from running up huge debts from buying virtual currencies on credit, if their values were to plummet.
Concerns have been rising among credit card providers as their customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to purchase the digital currencies.
The world's second biggest payments network, Mastercard Inc last week said customers buying crypto currencies with credit cards fueled a 1 percentage point increase in overseas transaction volumes in the fourth quarter.
At the time, Bitcoin was rising sharply in value, hitting a peak of $19,187 on 16 December on the Luxembourg-based Bitstamp exchange.
The biggest and best-known crypto currency has since fallen dramatically and was yesterday down by 6 per cent to $7700 at 1100 GMT on Bitstamp, adding to losses on Friday as worries of a global regulatory clampdown emerged.
According to commentators, Lloyds Banking Group is the first in UK to ban credit card customers from borrowing to buy the digital currency, whose value has more than halved in recent months.
According to a spokeswoman for the banking group, across Lloyds Bank, Bank of Scotland, Halifax and MBNA, the group will not accept credit card transactions involving the purchase of cryptocurrencies.
Bank of Scotland, Halifax and MBNA are part of the Lloyds Banking Group.
The move comes after regulators in the US, South Korea, China, Russia and India issued warnings over the cryptocurrency.