Sun, Feb 04, 2018 - Page 16 News List

Bitcoin ban expands across credit cards

RISKY BUSINESS:The US’ largest banks do not want to face the liabilities associated with cryptocurrencies after bitcoin lost more than half its value since Dec. 18 last year


A growing number of big US credit card issuers are deciding they do not want to finance a falling knife.

JPMorgan Chase & Co and Bank of America Corp, the nation’s two largest banks, said they are halting purchases of bitcoin and other cryptocurrencies on their credit cards.

JPMorgan, enacting the ban yesterday, does not want the credit risk associated with the transactions, said Mary Jane Rogers, a spokeswoman for the firm.

Bank of America began declining credit card transactions with known crypto exchanges on Friday. The policy applies to all personal and business credit cards issued by the bank, it said in a memo.

The move does not affect debit cards, Bank of America spokeswoman Betty Riess said.

Allowing purchases of cryptocurrencies can create big headaches for card lenders, which can be left on the hook if a borrower bets wrong and cannot repay.

There is also the risk that thieves could abuse cards that were purloined or based on stolen identities, turning them into crypto-hoards.

Banks are also required by regulators to monitor customer transactions for signs of money laundering — which is not as easy once dollars are converted into digital coins.

Bitcoin has lost more than half its value since Dec. 18 last year, falling below US$8,000 on Friday for the first time since November.

The drop occurred amid escalating regulatory threats around the world, fear of price manipulation and Facebook Inc’s ban on advertisements for cryptocurrencies and initial coin offerings.

Cutting off card purchases could exacerbate those pressures by making it more difficult for enthusiasts to buy into the market.

Citigroup Inc, the nation’s third-biggest bank, is still reviewing its policy. Capital One Financial Corp and Discover Financial Services previously said they are not supporting the transactions.

Mastercard Inc said this week that cross-border volumes on its network — a measure of customer spending abroad — have risen 22 percent this year, fueled partly by clients using their cards to buy digital currencies.

The firm said that the trend was already beginning to slow as cryptocurrency prices fell.

Discover CEO David Nelms was dismissive of financing cryptocurrency transactions during an interview last month, noting that could change depending on customer demand.

For now, “it’s crooks that are trying to get money out of China or wherever,” he said of those trying to use the currencies.

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