Banks in Britain and the United States are backing out of the cryptocurrency frenzy. Lloyds Banking Group Plc, as well as other big lenders, have banned the use of credit cards to purchase Bitcoin and other digital currencies. The move is due to Bitcoin’s shifting nature as it could render many customers unable to repay their debts to the banks.
On Sunday, Lloyds Bank followed in the steps of US banking giants, JP Morgan Chase and Citigroup, which have also banned the use of credit cards to buy cryptocurrency.
The decision was made to protect customers from amassing huge debts from buying digital currencies on credit, if their values were to decrease, according to a Lloyds spokeswoman.
Credit card providers have expressed concern because their customers have been using their credit cards to make accounts on online exchanges, which were then used to buy virtual currencies.
Financial services corporation, MasterCard, revealed that customers buying cryptocurrencies with credit cards contributed 1 percentage point increase in overseas transaction volumes in the fourth quarter.
During that time, Bitcoin was breaking record after record, having reached a peak of just under $20 thousand in December.
Ever since then the cryptocurrency’s value has been plummeting each week to new lows. Bitcoin was down by 6 percent to $7700, according to Luxembourg-based exchange, Bitstamp amid fears of a potential worldwide regulation crackdown.
Chase bank representative said that they are not currently processing credit card purchases of cryptocurrencies due to their volatility and risk involved while a Citibank spokeswoman mentioned a similar ban without giving any details.
“Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies,” a Lloyds spokeswoman said.
Other financial institutions such as Barclays and HSBC have yet to reveal their approach to the cryptocurrency unraveling.
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