Three major US banks — JPMorgan Chase, Bank of America and Citigroup — announced Friday that they will no longer allow customers to buy cryptocurrencies using their credit cards.
Bloomberg cited a JPMorgan spokeswoman as saying that the bank took the move as it wants to avoid the credit risk associated with virtual currency transactions. Meanwhile, Bank of America also started declining credit card transactions with known crypto exchanges. The policy applies to all personal and business credit cards, but doesn’t affect debit cards, according to the report. And late Friday, Citigroup said it too will halt purchases of cryptocurrencies on its credit cards. “We will continue to review our policy as this market evolves,” a bank spokeswoman told Bloomberg. The decisions came as bitcoin has lost more than half its value since Dec. 18, falling below US$8,000 on Friday for the first time since November.
The slide in bitcoin, as well as other crypto units such as Ethereum and Ripple, occurred amid escalating regulatory threats around the world and fear of price manipulation. For credit card issuers, there’s a worry that borrowers could make wrong bets on the notoriously volatile crypto units, suffer losses and are unable to repay their card dues.
Moreover, there’s also the risk that thieves will abuse cards that were purloined or based on stolen identities, Bloomberg noted. Banks also are required by regulators to monitor customer transactions for signs of money laundering — which isn’t as easy once dollars are converted into digital coins. Mastercard said last week that cross-border volumes on its network have risen 22 percent this year, fueled partly by clients using their cards to buy digital currencies. But the company said the trend is beginning to slow following the slide in cryptocurrency prices.
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