The news headlines this week is that several banks in the USA and the UK have banned the use of charge cards to purchase crypto currencies (CC’s). The stated reasons are impossible to think – like trying to curtail money laundering, gambling, and protecting the retail investor from excessive risk. Interestingly, the banks enables debit card purchases, making it clear that the only real risks being protected are their own.
With a credit card you can gamble at a casino, buy guns, drugs, alcohol, pornography, everything and anything you want, but some banks and credit card companies want to prohibit you from utilizing their facilities to purchase crypto currencies? There has to be some believable reasons, and they are NOT the reasons stated.
Something that banks are scared of is how difficult it should be to confiscate CC holdings once the credit card holder defaults on payment. It would become more difficult than re-possessing a house or perhaps a car. A crypto wallet’s private keys could be put on a memory stick or an item of paper and easily taken off the nation, with little if any trace of its whereabouts. There could be a high value in a few crypto wallets, and the credit card debt may never be repaid, leading to a declaration of bankruptcy and an imp Uniswap Exchange ortant loss for the bank. The wallet still provides the crypto currency, and the owner can later access the private keys and make use of a local CC Exchange in a foreign country to convert and pocket the money. A nefarious scenario indeed.
We’re certainly not advocating this kind of unlawful behavior, but the banks are aware of the possibility and a number of them want to shut it down. This can’t happen with debit cards since the banks are never out-of-pocket – the money comes from your account immediately, and only when there is enough of your cash there to start with. We struggle to locate any honesty in the bank’s story about curtailing gambling and risk taking. It’s interesting that Canadian banks are not jumping with this bandwagon, perhaps realizing that the stated reasons for doing so might be bogus. The fallout from these actions is that investors and people are now conscious that credit card companies and banks do have the capability to restrict what you can buy with their credit card. This is simply not how they advertise their cards, and it is likely a surprise to many users, who are quite used to deciding for themselves what they’ll purchase, especially from CC Exchanges and the rest of the merchants who’ve established Merchant Agreements with these banks. The Exchanges have inked nothing wrong – neither have you – but fear and greed in the banking industry is causing strange things to happen. This further illustrates the degree to that your banking industry feels threatened by Crypto Currencies.