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[Update] Multiple Banks have barred credit card customers from buying cryptocurrencies amidst fears of a crash

Master Disaster

Update

 

Virgin Money, Bank of America, Citigroup, JP Morgan, Capital One and Discover have all joined (some made the change over the weekend) Lloyd's in banning the purchase of Cryptocurrencies using credit cards

Quote

Virgin Money has joined Lloyds Banking Group in banning customers from buying Bitcoin and other digital currencies with their credit cards.

 

Virgin Money's spokesperson said: "Following a review of our policies, I can confirm customers will no longer be able to use their Virgin Money credit card to purchase crypto-currencies."

 

Like Lloyds, Virgin's ban only applies to its credit cards, not debit card

Like Lloyds, Virgin Money is concerned about customers running up large debts following a sharp fall in the value of digital currencies.

Over the weekend, several of the biggest issuers of credit cards in the US also banned customers from using their cards to buy digital currency.

 

The list of financial firms included Bank of America, Citigroup, JP Morgan, Capital One and Discover.

 

Original post

 

Lloyd'sBanking group that runs Lloyd's, Halifax, Bank of Scotland & MBNA branches announced today that effective immediately it's credit card customers can no longer purchase bitcoin using their credit cards.

Quote

Lloyds Banking Group has banned its customers from buying Bitcoin on their credit cards following a sharp fall in the value of the digital currency.

 

The ban, starting on Monday, applies to Lloyds Bank, Bank of Scotland, Halifax and MBNA customers.

Debit card users will be unaffected by the move which Lloyd's say is because they feel people are buying BTC with the intentions of making a profit but instead might end up in debt as prices continue to fall.

Quote

Lloyds fears people are buying Bitcoin to make a profit if its value rises but face debts if it falls.

 

It is concerned it could end up footing the bill for unpaid debts should the price continue to fall.

 

Explaining the ban, a Lloyds spokeswoman said: "We continually review our products and procedures and this is part of that."

Bitcoin ended last week down 30% on its November high however it's still way ahead of where it was last February.

Quote

Bitcoin ended last week down 30% at $8,291.87 - its worst week since April 2013 and far below the $19,000 it reached last November.

 

However, the cryptocurrency is still ahead of the $1,000 it was trading at this time last year.

The move comes as both UK politicians and the police are looking into ways of stopping cryptocurrencies from being used to fund illegal and criminal activities.

Quote

Police have warned that digital currencies remain popular among criminals as they can use them to evade traditional money laundering checks and other regulations.

 

Prime Minister Theresa May recently said that action against digital currencies may be required "precisely because of the way they are used, particularly by criminals".

 

She told Bloomberg: "In areas like cryptocurrencies, like Bitcoin, we should be looking at these very seriously."

 

The Treasury said that it intends to update regulation to bring virtual currency platforms into anti-money laundering and counter-terrorist financing regulation.

http://www.bbc.co.uk/news/business-42940728

 

Seems like the bank is worried about a full crash and IMO are looking to protect themselves from ending up with huge credit card debts if it happens.

 

Probably a smart move imo.

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This is a good move imo. I'm all for freedom of currencies or whatever baloney you call it, but theres more money to be made elsewhere and illegal activity is not on. Stick with the real thing.

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When the bank, government, and law enforcements are all trying to stop crypo currency then you can expect no future there

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15 minutes ago, Bcat00 said:

When the bank, government, and law enforcements are all trying to stop crypo currency then you can expect no future there

I don't think the bank really care about stopping it, they just don't want plebs rattling up credit card debt buying an unstable and currently deflating currency.  people are treating bitcoin as an investment and just like any other investment, if it isn't sound the bank will not lend you money for it.

 

 

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I agree, I think its a good thing. IMO, its fair enough if you have the money for it and you are willing to take that risk with your own money, but you shouldn't be allowed to use someone elses to do it. There are far too many people out there who just can't be trusted with money.

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makes sense i guess. they dont see bitcoin as a solid investment so they wont allow you to blow yourself into insaine debt because it crashes more

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1 hour ago, Bcat00 said:

When the bank, government, and law enforcements are all trying to stop crypo currency then you can expect no future there

When illegal criminal and terrorist groups use cryptocurrency then you can expect no future there.

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11 minutes ago, RorzNZ said:

When illegal criminal and terrorist groups use cryptocurrency then you can expect no future there.

they dont need cryptocurrencies, they just bribe bank executives to launder their money for them.

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17 minutes ago, RorzNZ said:

When illegal criminal and terrorist groups use cryptocurrency then you can expect no future there.

That's false information and you should know better. Almost all crypto is, for a government intelligence agency, easier to track than real money flows.

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5 minutes ago, Taf the Ghost said:

That's false information and you should know better. Almost all crypto is, for a government intelligence agency, easier to track than real money flows.

dam how did I not see allowing more streams of income for terrorist groups is ok because its easy to track

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I wonder how many other banks will follow suit now and if this move itself might hurt the bitcoin economy.

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I support this, as it stops people being tools and fucking the banks over in their get rich quick schemes which with cyrptocurrent is a very risky thing to do

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1 minute ago, grimreeper132 said:

I support this, as it stops people being tools and fucking the banks over in their get rich quick schemes which with cyrptocurrent is a very risky thing to do

It seems like the banks have learned a lesson from the naughties "mortgages for everyone" attitude that lead to the global recession.

 

Toxic debt isn't good for anyone, customers lose money and can't pay the banks, banks lose income and turn to government for shoring up and economic markets lose confidence in the banks abilities to lend and collect debts causing markets to fluctuate.

 

Now I doubt BTC debt is anywhere near large enough to cause a global recession but I bet it could cause banks to lose some pretty large amounts.

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1 minute ago, Master Disaster said:

It seems like the banks have learned a lesson from the naughties "mortgages for everyone" attitude that lead to the global recession.

 

Toxic debt isn't good for anyone, customers lose money and can't pay the banks, banks lose income and turn to government for shoring up and economic markets lose confidence in the banks abilities to lend and collect debts causing markets to fluctuate.

 

Now I doubt BTC debt is anywhere near large enough to cause a global recession but I bet it could cause banks to lose some pretty large amounts.

exactly they have learned, and yea it probably isn't that much but they have finally learnt to protect them self from things that have a potential to fuck them over

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2 hours ago, Bcat00 said:

When the bank, government, and law enforcements are all trying to stop crypo currency then you can expect no future there

Bitcoin is only one of the cryptocurrencies out there (and, in my opinion, one of the worst). What probably has no future is the mindless speculation that's going on right now, which is a good thing. There are very cool applications to blockchain technology which don't depend on bitcoin or any other "currency"'s market value.

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31 minutes ago, RorzNZ said:

dam how did I not see allowing more streams of income for terrorist groups is ok because its easy to track

terrorists are among the most motivated groups of people there is, and they will find ways to move their money.

Plus on most crypto currencies there are backlogs to all transactions which means that even if they get away with it now latter investigations can follow the money with ease, but if they get away with moving a bag of money through an airport for example, there is almost no way of tracking it.

and because very few currencies have ways to trade to fiat, its had to trade the money always on crypto currencies that don't allow access to the logs.

if you meant that they are mining, maybe but they usually have powerful people financing them, which reduces the need to mine.

 

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53 minutes ago, RorzNZ said:

dam how did I not see allowing more streams of income for terrorist groups is ok because its easy to track

this is almost like the discussion on encryption... terrorists can benefit from it so lets fuck everyone!

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1 hour ago, RorzNZ said:

dam how did I not see allowing more streams of income for terrorist groups is ok because its easy to track

 

25 minutes ago, cj09beira said:

terrorists are among the most motivated groups of people there is, and they will find ways to move their money.

Plus on most crypto currencies there are backlogs to all transactions which means that even if they get away with it now latter investigations can follow the money with ease, but if they get away with moving a bag of money through an airport for example, there is almost no way of tracking it.

and because very few currencies have ways to trade to fiat, its had to trade the money always on crypto currencies that don't allow access to the logs.

if you meant that they are mining, maybe but they usually have powerful people financing them, which reduces the need to mine.

 

There are public ledgers, so the determined (or tipped off) intelligence agency can actually go back years to follow the money flows. It's actually quite hard to launder money with crypto right now, simply because of the relatively small size of the Crypto -> Hard Currency exchanges. 

 

This specific move with Credit Cards is actually an anti-gambling move. Basically, because of the current exchange fees, "buying" BTC off exchange is cheaper than using converted money on an exchange. People are effectively leverage trading BTC with their CC, and Banks can get in a world of trouble if a government decides to be prickly about it.

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54 minutes ago, Bananasplit_00 said:

this is almost like the discussion on encryption... terrorists can benefit from it so lets fuck everyone!

Well yeah, it could be put that black and white. Its more of an effect rather than what they are doing in this situation.

Whether or not people say its hard to do or easy to track, it is still popular, according to the article, among them. If criminals use traditional money laundering and cryptocurrencies then not tracking crypto will be one less job for intelligence agencies.

It is unfortunate for the people with high hopes for crypto, but they still have time to sell (really I would be selling anyway with the outlook on this - although its hard to predict, it might go up).

 

 

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2 hours ago, RorzNZ said:

When illegal criminal and terrorist groups use cryptocurrency then you can expect no future there.

Terror groups have entire countries funding them, they don't need CC.

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2 hours ago, Master Disaster said:

It seems like the banks have learned a lesson from the naughties "mortgages for everyone" attitude that lead to the global recession.

I don't think they've learned tbh cos now there's Credit Cards for everyone. Even for the people who shouldn't have one.

 

And yes I'm saying that xD.

2 hours ago, Master Disaster said:

Now I doubt BTC debt is anywhere near large enough to cause a global recession but I bet it could cause banks to lose some pretty large amounts.

In the UK, the government has forced banks to protect people by making banks "Ring Fenced" by 2019 to isolate Consumer banking from Commercial Investments etc. So, theoretically if Bitcoin crashed in 2019 and if people paid for it beforehand using Credit then they probably wouldn't be in as bad of a situation.

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Not sure on the exact rules, but when any bank or similar lends money they have to do it responsibly, otherwise they become liable when things go wrong. In this context, it makes sense, but it is not a requirement in itself. 

 

I'm not sure if it also applies, but consumer credit card purchases also have extra protection if something goes wrong. If cryptocurrency purchases are classified as cash advances, this may not apply.

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4 hours ago, AluminiumTech said:

I don't think they've learned tbh cos now there's Credit Cards for everyone. Even for the people who shouldn't have one.

 

And yes I'm saying that xD.

In the UK, the government has forced banks to protect people by making banks "Ring Fenced" by 2019 to isolate Consumer banking from Commercial Investments etc. So, theoretically if Bitcoin crashed in 2019 and if people paid for it beforehand using Credit then they probably wouldn't be in as bad of a situation.

Credit cards would be within the ring fence, they are part of consumer banking. It is investment banking, global banking and large business banking. So for example in the case of the 2008 crash the international mortgage debt bundled up into 'investment vehicles' that went bad would now fall out side the ring fence, bad domestic mortgage debt would still fall within. Though the amount of credit card debt used to purchase cryptocurrency wouldn't be large to threaten a bank in the event of a crypto-crash, Lloyd's are just being either overly cautious, or no where near cautious enough when deciding peoples credit limits.  

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tl:dr banks don't want you to be an idiot with your (their) money and have put measures in place to ensure you will not do so.

Not really a big news item that people are making it out to be...

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9 hours ago, Taf the Ghost said:

That's false information and you should know better. Almost all crypto is, for a government intelligence agency, easier to track than real money flows.

I'm really not sure about that.   Apart from the link between the *rise of internet crime and the use of crypto driving/serving it, if it was that much easier to track transactions to people, we would likely be seeing support for blockchain implementation from governments not the more reserved approach they seem to be taking.

 

9 hours ago, Master Disaster said:

I wonder how many other banks will follow suit now and if this move itself might hurt the bitcoin economy.

They mostly likely all will. I have heard there are banks in Aus that just won't trade with crypto exchanges and people have had issues in the past selling crytpo in Australia (I don't know why).

 

*Many articles talking about the rise of ransomware because of bitcoin. and also a few regarding the big companies buying up bitcoin to use to hush ransomware attacks. Which I assume played it's part in pushing the price up.

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