Banks in the UK are giving mixed signals to cryptocurrency investors. Some have announced that they will no longer allow purchases to be made for digital currencies such as Bitcoin and Ethereum using their credit cards. Meanwhile, others have stated that they will enforce no such ban and as long as the transactions made abide by anti-money laundering legislation, purchases will still be possible.
Europe’s largest bank, HSBC, stated:
“In countries where use of virtual currencies is permitted by the authorities, we expect any customer transacting in them to comply with all applicable laws and regulations, just as they would for transactions denominated in traditional legal tender.”
Meanwhile, the UK’s largest credit card provider, Barclays, said:
“Yes, Barclays customers can send/receive transfers for activities linked to Bitcoin/Cryptocurrency investments… Regarding using credit/debit cards to buy cryptocurrencies from exchanges, the answer here lies with Visa who process Barclays Debit Card payments, as it will depend how the receiver (the seller of Bitcoin) is defined as a “merchant” on their systems… In principle if it’s a genuine request to purchase from a legitimate provider it would go through, therefore there’s no policy to block.”
Meanwhile, the attitude of both HSBC and Barclays towards using credit cards to buy cryptocurrency is at odds with that of the UK’s Lloyds and Virgin banks. These two have followed the example set by US banks JP Morgan Chase & Co and Citigroup in declaring a ban on all purchases made using credit.
Yahoo Finance talked with a spokesperson for Lloyds and Barclays. The former cited customer protection as the primary reason behind their stance on credit card cryptocurrency purchases. According to them, the move is to prevent customers being unable to repay their credit card bills should the value of the digital currency purchases using the bank’s money plummet. The Barclays spokesperson presented a completely opposing statement:
“We constantly review our protections for customers as a responsible bank and lender, and are keeping this matter under close review… At present UK customers can use both their Barclays debit card and Barclaycard credit card to purchase cryptocurrency legitimately.”
Whilst some have taken the news of a credit card crypto clampdown as negative, it’s hardly surprising that banks don’t want their customers using borrowed money to buy speculative assets. If they believe the chances of them being repaid on time is in jeopardy, it’s natural that they would do everything in their power to limit their own exposure to risk. It’s interesting to note that such a ban only extends to credit card purchases. This is not an expression of hostility towards cryptocurrency in general by the banks. Customers can still use their debit cards (their own money) to buy digital currencies.