Britain’s largest banking group is banning its credit card customers from buying cryptocurrencies including bitcoin. Credit card issuers that are banning crypto transactions include the UK’s largest retail bank, Lloyds Bank, Bank of Scotland, Halifax, and MBNA.
Largest British Banking Group Banning Crypto
Britain’s largest banking group with 30 million customers, Lloyds Banking Group, said on Sunday that it will ban its credit card customers from buying bitcoin and other cryptocurrencies, Reuters reported.
Lloyds Banking Group operates the UK’s largest retail bank, Lloyds Bank, as well as other well-known brands: Bank of Scotland, Halifax, MBNA, Black Horse, LDC, AMC, Colleys, Scottish Widows, Lex Autolease, and Birmingham Midshires.
The group has “9 million credit card customers that it will block any attempts to buy bitcoin after the digital currency lost more than half its value in just two months,” the Telegraph reported, noting that debit cards are unaffected and customers can continue to buy cryptocurrencies using them. Citing that Lloyds has a quarter of the UK credit card market, the news outlet elaborated:
From Monday credit card customers of Lloyds, which includes Halifax, Bank of Scotland and MBNA, will be blocked from buying the cryptocurrency online via a blacklist which will flag up sellers.
A spokeswoman for Lloyds confirmed to Reuters in an email that ”Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”
Fear of Huge Losses
Lloyds’ decision was made to “protect customers” from making unaffordable losses on bitcoin, the company’s spokesman was quoted by the Telegraph. According to a finance lecturer at Manchester Metropolitan University, Gavin Brown, “For some people, the only way to finance this level of speculation is through credit, with people just doing it to make a gain.”
The company’s announcement came “amid fears they [credit card customers] could run up huge losses,” the publication conveyed, adding that:
The bank fears it could end up footing the bill for unpaid debt should the price fall any lower.
In addition, “Concerns are also growing that bitcoin and other cryptocurrencies are being used for drug dealing and money laundering,” the publication expressed, adding that “It is thought that other banks will shortly follow suit.”
A Global Epidemic
Several US banks have also announced a ban on cryptocurrency credit card payments. On Friday, Bank of America, JP Morgan, and Citigroup said that they would block attempts to buy cryptocurrencies using credit cards.
“At this time, we are not processing cryptocurrency purchases using credit cards, due to the volatility and risk involved,” a JP Morgan Chase spokesperson told CNBC. Similarly, Citigroup said in a statement that it has “made the decision to no longer permit credit card purchases of cryptocurrency.”
“Bank of America started declining credit card transactions with known crypto exchanges on Friday,” according to Bloomberg, adding that the policy applies to all personal and business credit cards but does not apply to debit cards.
In South Korea, card companies are also voluntarily blocking transactions to overseas cryptocurrency exchanges. According to Business Korea, “Card companies have adopted the system in line with the government’s efforts to tackle speculative investment in virtual currencies.”
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Images courtesy of Shutterstock and Lloyds Banking Group.