Lloyds, Bank of America, Other Banks Start Blocking Bitcoin Purchases on Credit Cards

Multiple banks around the world have announced plans to block bitcoin purchases on their credit cards. These include purchases that would be made on cryptocurrency exchanges with the intention of acquiring the investment option in general. The bans are specifically made with the bitcoin in mind, but they may also carry over to other cryptocurrencies on the market.

The move comes as many investors are using credit cards to work as leverage for buying the bitcoin. The leverage often makes it easy for people to spend more on their bitcoin investments than what they can afford to handle. Banks are expressing a concern that the purchases can result in unsecured debts that may be extremely difficult for some to actually pay off, a problem that may be greater if a currency declines in value.

American Bans

Bank of America and JPMorgan became the latest banks in the United States to outlaw bitcoin transactions on their credit cards. The two banks made the move to stop these transactions during the past weekend.

Citigroup has also announced it will stop accepting bitcoin purchases and other cryptocurrency deals on its credit card. This joins similar bans from Discover and Capital One that had been imposed earlier. This moves that the top five credit card companies in the United States have all either banned cryptocurrency purchases or will be doing so very soon.

Lloyds Stops Use

Lloyds, the prominent United Kingdom bank and financial service provider, announced it will not accept any transactions that entail bitcoin and cryptocurrency purchases. This includes not only the Lloyds Bank but also Bank of Scotland and MBNA. Lloyds became the first bank in the United Kingdom to outlaw bitcoin transactions on their credit cards. Lloyds specifically cited concerns over unsecured debt as a vital reason for choosing to block bitcoin purchases on its cards.

Potentials In India

There is a strong possibility that credit card service providers in India may go forward and do the same thing. Finance Minister Arun Jaitley said that the government is not going to consider cryptocurrencies to be a form of legal tender. There is a potential that such assets will be refused in the payment systems in the country as a means of controlling the development of illegal activities.

This may result in banks around India refusing to use bitcoin transactions on their credit cards. It is uncertain as to whether any banks are going to carry through with this plan.

Impact on Values

The moves by various credit card service providers around the world have caused the bitcoin and other currencies to struggle. Multiple cryptocurrencies have declined by at least 10 percent off of their values. This includes the bitcoin falling below the $8,000 market. The currency has lost more than half of its peak value over time. The cryptocurrency market has lost at least $100 billion in its overall market cap and has gotten to $360 billion total as of the morning of February 5. The bitcoin makes up a little more than a third of that total.