Following fresh on the heels of Coinbase warning its customers that cryptocurrency purchases made with credit cards would be treated as cash advances rather than as credit purchases, Bank of America and JPMorgan Chase have just recently forbidden their credit card customers from using their cards to purchase cryptocurrencies. According to reports, the companies were concerned about the ability of customers to pay for their cryptocurrency purchases, as well as the potential for fraud.
JPMorgan Chase apparently feared that its credit card customers wouldn’t be able to pay for their cryptocurrency purchases. It wouldn’t be at all surprising if some customers had maxed out their credit cards to purchase Bitcoin or other cryptocurrencies, hoping to sell their holdings for a profit in order to pay off their cards. Now that prices have retrenched this year, those customers may be facing some pretty hefty bills and may lack the ability to pay off their purchases.
Bank of America cited anti-money laundering concerns as part of its decision to ban its credit card customers from purchasing cryptocurrencies, as well as the possibility that thieves might attempt to use stolen credit cards to purchase cryptocurrencies. Customers who use debit or ATM cards to purchase cryptocurrencies will still be allowed to do so.
The crackdown isn’t limited to the United States either, as the Lloyds Banking Group in Great Britain is imposing a similar ban on its millions of credit card customers. Just like in the US, Lloyds is concerned that its credit card customers might lack the ability to pay their bills.
These actions won’t affect Bitcoin IRA customers, as their purchases of cryptocurrencies will be made with pre-tax dollars such as from existing retirement accounts. If these credit card cryptocurrency crackdowns actually do keep poor credit risks from purchasing cryptocurrencies, however, then it would actually serve as a useful service to the overall cryptocurrency market, keeping out short-term speculators whose only motivation is to make a quick buck. That will result in a more robust Bitcoin and cryptocurrency market whose prices more accurately reflect the long-term potential of cryptocurrencies.