Big banks decline to follow Lloyds lead on bitcoin credit card bans
Lloyds Banking Group and challenger Virgin Money have banned customers from buying bitcoin and other cryptocurrencies using credit cards, but other big British banks say they currently have no plans to clamp down on the risky assets.
A wave of lenders around the world have placed restrictions on customers using debt to buy digital currencies, including JP Morgan Chase, Bank of America, Capital One and Citigroup. They fear being on the hook for big losses if the cryptocurrency sell-off continues.
Yet Royal Bank of Scotland (RBS), Barclays, Nationwide, Tesco and TSB have no plans to implement their own bans – although some banks noted they will keep an eye on cryptocurrency borrowing.
Read more: Lloyds Bank bans bitcoin and other cryptocurrency credit card purchases
A Barclays spokesperson said it was “keeping this matter under close review”. Meanwhile, RBS has no plans currently to change its policy – in spite of its chair, Sir Howard Davies, comparing the bitcoin market to hell from Dante’s Inferno in December.
The Lloyds ban, which comes into effect today across all of the British banking giant's brands, will mean cryptocurrency exchanges are blacklisted by the bank, preventing customers from taking on debt to buy the volatile assets.
A Lloyds spokesperson said: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”
Read more: Bitcoin credit card bans introduced by JP Morgan, Bank of America and Citi
The ban will not cover debit card transactions, but will prevent customers from using credit to speculate on the price of cryptocurrencies amid fears the bubble may be bursting.
A spokesperson for debt charity Step Change said the group welcomes “the focus on how using personal credit for investments can cause debt problems.
“It’s right that banks are looking out for high-risk purchases which could cause consumer detriment should things go wrong, especially considering the fact that credit cards are not a product designed to be used for such risky investments,” the spokesperson said.
The ban comes as holders of bitcoin and other digital assets continue to suffer steep declines. The US dollar value of bitcoin alone has fallen by more than 13 per cent in the last 24 hours, according to the OnchainFX website, while other major cryptocurrencies have also suffered steeper losses.
At the time of writing the price of bitcoin had fallen to below $7,500, having been valued at more than $9,000 as recently as Sunday morning. However, one-year returns for bitcoin speculators are still above 600 per cent, despite the massive decline from the pre-Christmas high nearing $20,000 per coin.
Read more: January bitcoin blues: $44bn has been wiped from its value so far this year
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