The news this week is that several banks in the USA and the UK have banned the use of credit cards to get crypto currencies (CC’s). The stated reasons are impossible to trust – like attempting to curtail money laundering, gambling, and protecting the retail investor from excessive risk. Interestingly, the banks will allow debit card purchases, rendering it clear that the only 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 need, but some banks and charge card companies want to prohibit you from using their facilities to get crypto currencies? There must be some believable reasons, and they are NOT the causes stated.
One thing that banks are frightened of is how difficult it is always to confiscate CC holdings when the charge card holder defaults on payment. It would be more difficult than re-possessing a residence or perhaps a car. A crypto wallet’s private keys can be wear a memory stick or a piece of paper and easily removed from the nation, with little or no trace of its whereabouts. There can be a high value in certain crypto wallets, and the charge card debt may never be repaid, resulting in a declaration of bankruptc Uniswap y and a substantial loss for the bank. The wallet still contains 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 are most certainly not advocating this sort of unlawful behavior, however the banks are alert to the likelihood and many of them want to shut it down. This can’t happen with debit cards as the banks are never out-of-pocket – the cash comes out of your account immediately, and only when there is enough of your cash there to begin with. We struggle to get 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 can be bogus. The fallout from these actions is that investors and individuals are now conscious that charge card companies and banks really do have the capacity to restrict what you can aquire using their credit card. This isn’t how they advertise their cards, and it is likely a surprise to many users, who’re quite used to deciding for themselves what they will purchase, especially from CC Exchanges and all of those other merchants who’ve established Merchant Agreements with your banks. The Exchanges have inked nothing wrong – neither perhaps you have – but fear and greed in the banking industry is causing strange items to happen. This further illustrates the degree to that your banking industry feels threatened by Crypto Currencies.