Five Major Credit Cards Are Now Blocking Cryptocurrency Purchases (cnbc.com)

An anonymous reader quotes CNBC: J.P. Morgan Chase, Bank of America and Citigroup said Friday they are no longer allowing customers to buy cryptocurrencies using credit cards. "At this time, we are not processing cryptocurrency purchases using credit cards, due to the volatility and risk involved," a J.P. Morgan Chase spokesperson said in a statement to CNBC. "We will review the issue as the market evolves."

A Bank of America spokesperson also said in an email that the bank has decided to decline credit card purchases of cryptocurrencies. Citigroup said in a statement that it has "made the decision to no longer permit credit card purchases of cryptocurrency. We will continue to review our policy as this market evolves." Earlier in January, Capital One Financial said it has decided to ban cryptocurrency purchases with its cards. Discover Financial Services has effectively prohibited cryptocurrency purchases with its credit cards since 2015.

Comments

Fuck them

[Anonymous Coward]

Who do they think they are stopping me from purchasing a totally legal 'thing' with the card? "Volatility" of my purchase is none of their concern, only concern they have is if i pay my bill.

They are melting down from fear.

Need to sue the bastards.

Re:Fuck them

[cayenne8]

You already can't buy everything with a credit card.

I honestly am having a vERY difficult time thinking of something legal that I cannot purchase with a CC?

Hell, they even let you take cash advances out on CC's in casinos, I mean...how much more volatile does that get?

Re:Fuck them

[gravewax]

when you are using your money you can do whatever you like with it. When you are using someone else's then they get some semblance of control. This would be the case whether you buy in dollars, bitcoin or tulip bulbs. Crypto currencies do nothing to address this at all.

Re:Fuck them

[Bert64]

You can buy anything legal that someone is willing to sell and accept cards, the card issuers usually don't place restrictions on what you can buy, its entirely the choice of the sellers if they are willing to sell the goods and take cards as payment for them.

All this talk of "volatility and risk" is a blatant lie, the banks are scared that crypto will cut them out of the loop.

If they were truly concerned about risky purchases, they wouldn't let you buy stocks, or use cards to pay for other forms of gambling etc.

Re:Fuck them

[vtcodger]

"Who do they think they are stopping me from purchasing a totally legal 'thing' with the card? "Volatility" of my purchase is none of their concern, only concern they have is if i pay my bill."

Credit card companies are sort of like a mixture of a bank and a casino. They lend money short-term, collect fees, pay their operating expenses, eat a few losses when a client joins ISIS or enters a monastery or is tossed into a penitentiary with a substantial unpaid bill. They get to keep whatever is left over. They have to manage risk.

I would guess that they had a meeting and gamed out some schemes for defrauding their operation via cryptocurrency purchases. And they decided that there were entirely too many such schemes. Nothing like a nebulous "asset" whose ownership is obscured purchased from sources who charge unpredictable fees and have a tendency to evaporate, to make a money guy nervous.

Anyway, it's their house, you play by their rules.

So, pay for your cryptocurrency with a check or EFT transfer, or a money order or cash. If you need a short term loan, try a payday lender.

Re:Fuck them

[burningcpu]

You can't buy medical marijuana with a credit card. Dispensaries are typically a cash - operation.

Re:Fuck them

[freeze128]

I bet the reason for this is that too many cardholders are using the credit card company's "buyer protection" service to get money back from a bad bitcoin investment. That way the bank gets involved, and loses money, and now therefore won't allow bitcoin purchases at all.

Re:Fuck them

[pestilence669]

IIRC, Visa has an entire department devoted to what kind of porn you can buy with a credit card. For instance: There are literally paragraphs of credit card regulations solely about pee. A woman can pee on another woman, and a woman or man can pee on a man or themselves, but a man can never pee on a woman. This includes a man peeing on the ground and a woman rolling around in it, using jars & other containers for transporting the pee, etc, etc. It's all written in legalese and closes just about every loophole that might result in a drop of man pee landing on a woman's skin from being payed for with a Visa. All other forms are 100% okay!

Re:Fuck them

[WeezulDK]

I work for casinos. I know for a fact you can use a credit card to get cash which then you can play with. You just can't use the card to directly buy the chips without cash. But by extension, you can buy chips with a credit card, you just have an extra step to go through to get it. It's really semantics in the end.

But hookers and blow are ok

[geek]

Because they don't directly compete with our business

The ultimate tradeoff that Bitcoin prevents

[PhrostyMcByte]

We've moved to a mostly cashless society and made a handful of banks the arbiters of what we're allowed to buy.

And Bitcoin is designed explicitly to prevent this kind of abuse. Of course they're afraid of it.

Re:The ultimate tradeoff that Bitcoin prevents

[smccurry]

I think the problem is, if you buy crypto on credit, it's basically a cash advance. You're buying another currency. Even if that weren't the case, its overly easy to buy crypto on credit and sell it for cash seconds later. It would be so easy to max out a credit card and run off with the cash, which I'm guessing is their main motivation.

Re:The ultimate tradeoff that Bitcoin prevents

[LynnwoodRooster]

You can buy whatever you want with a BoA, Chase, or other debit card - that's your money, use it as you want. A credit card is using their money, and promising to pay it back later. Just like when you get a mortgage or car loan, the person who actually has the money gets to dictate what it's used on.

It's the same thing with the USPS - you can use a credit card to buy postage, but if you want a postal money order then you need to pay cash or a debit card - you cannot use credit to buy, essentially, a monetary instrument.

Re:The ultimate tradeoff that Bitcoin prevents

[tlhIngan]

I think the problem is, if you buy crypto on credit, it's basically a cash advance. You're buying another currency. Even if that weren't the case, its overly easy to buy crypto on credit and sell it for cash seconds later. It would be so easy to max out a credit card and run off with the cash, which I'm guessing is their main motivation.

Well, the solution is to treat it as a cash advance. Which is perfectly legal - some transactions are treated as cash advances rather than a standard credit transaction.

I think the real issue is simply of risk - cryptocurrencies are too high risk, and there's no way the credit providers are going to lend (with protection) on such a high risk product. Paypal already did this - if you use Paypal to pay for a cryptocurrency transaction, Paypal says you lose all protections provided, so you cannot dispute the transaction later.

This can be important, especially with the likes of Bitcoin where a transaction can take weeks - consumer buys bitcoin, doesn't understand he won't get it immediately, then does a chargeback. Credit card investigates and by the time it's done the transaction completes and all that stuff. Or because of the way it fluctuates, that $100 in bitcoin they bought turned into $50 when they actually got it and they want that money back.

Since credit cards can't arbitrarily remove your right to chargeback or question any transaction you made, the only thing they can do is reduce their risk by removing risky merchants. This is done all the time in the real world, though usually it's the merchant who can't get the account.

That's why the banks are letting debit transactions through - since it's your cash, you have no right to charge back, and you can complain, but you most likely won't get your money back if the currency dips between when you buy it and when you actually get it.

Likely what happened is because of the plummeting value of bitcoin, people who bought it on credit are demanding chargebacks to try to recoup their losses. Paypal had to change their policy because of it, and I'm guessing credit lenders are doing the same - chargebacks are for protection against lame merchants, not hedges against price drops.

That's why crypto exists.

[The_Noosphere]

To prevent banks to tell you what to do with your money.

Re:That's why crypto exists.

[DRJlaw]

To prevent banks to tell you what to do with your money.

The rule applies to credit card transactions, not debit card transactions. It's their money - you've only pinky-promised to pay back the debt.

Since pretty much every ATM card functions as a debit card, there is probably nobody preventing you from buying cryptocurrency with your money. But yes, your bank feels entitled to dictate how you spend their money.

Re:That's why crypto exists.

[LynnwoodRooster]

How is a credit account "your money"? A debit card is your money - it pulls from your own bank account. But a credit card pulls from the bank's account, and you just have a promise to pay it back sometime in the future. They are not telling you what you can do with your money, but telling you want you can do with their money.

Re:That's why crypto exists.

[Kjella]

How is a credit account "your money"? A debit card is your money - it pulls from your own bank account. But a credit card pulls from the bank's account, and you just have a promise to pay it back sometime in the future. They are not telling you what you can do with your money, but telling you want you can do with their money.

But technically nothing stops you from making a cash withdraw and buying bitcoins with it or buying gold and selling that to buy bitcoins or buying your groceries on credit while spending your cash on bitcoins. What they approve is a credit limit, it shouldn't be whether I use it to buy groceries or beers at the local pub. I'm not sure if you're seriously suggesting what you're suggesting, but I certainly don't think the bank or credit card money should be allowed to inspect my finances simply because I owe them money. That would strip the privacy of everyone with a mortgage, even if they've dedicated a part of their paycheck to down pay it..

Re:That's why crypto exists.

[LemonFire]

The rule applies to credit card transactions, not debit card transactions. It's their money - you've only pinky-promised to pay back the debt.

Oh it's way more than pinky promise. They'll come back for more than just a finger if you can't pay up. In the end it may cost you an arm and a leg.

-- Reading this SIG repeatedly may cause a snow crash, you have been warned!

Re:That's why crypto exists.

[bn-7bc]

Wel jess it is very restricted, why is that? Oh yes you get a relatively speaking, low interest rate because the bank has som securety (your hose/appartment) which the can take if you fall to much behind on your payments, you allso need 10-20% of the purcase price (at least in the eu),, to qualify fopr the loan in teh first place and show a steady income. From the banks point of view it is all about amnaging risks.

Re:Risk.

[sgage]

Cryptocurrencies are only foolish speculation. Credit Cards are Satanic.

Chargebacks

[Anonymous Coward]

They are probably worried about chargebacks. Both for legitimate cases where the consumer got ripped off, and for cases where a stolen card is used to buy crypto. If the CC banks can't stick it to the vendor, they have to eat the loss to stay on the right side of their promises and consumer protection laws. And in this case, they must have seen enough abuse to decide to shut down that vector.

Re:What about Debit cards?

[sgage]

Why would they? It's about extending credit for dicey 'investments'. With cryptos heading south day by day, they consider people pouring money into it on credit as a bad risk. It's nothing but business.

Debit cards are cash - your money in the bank. If you want to blow it on cryptos, they don't care - they have no exposure.

Nothing is actually better than the current model

[Presence Eternal]

I recently made a purchase from a place that offered a bitcoin discount. I said "Ah hah, I'll be clever." and bought some on coinbase with my credit card to make the purchase.

Holy hell did I ever get shafted up the ass with fees. Ten bucks for buying a "cash equivalent", two bucks for "foreign transaction", five bucks to buy the bitcoin on coinbase, and another five bucks to send the coin with coinbase. The discount was big enough to eat most the fees, but I still lost out. Lesson learned I guess.

You're giving bitcoin too much credit

[rsilvergun]

the major banks could easily take it over. Hell, there's tons of evidence that the price has been heavily manipulated by the various exchanges, and they have a fraction of the power of a bank. They're not afraid, they don't want to deal with the risk of disputed transactions (especially in jurisdictions where disputes are tightly regulated).

The best antidote to banks controlling a cashless future is government regulation. Somebody has to be in charge of the money supply or it'll become unstable and wreck the economy. But giving somebody that power inevitably results in a strong concentrations of power. The only effective counter balance to that is Democracy. This is one of the reasons the left has been pushing for mandatory (and anonymous) voting. It really is a civic duty at that point.

Re:You're giving bitcoin too much credit

[cayenne8]

This is one of the reasons the left has been pushing for mandatory (and anonymous) voting. It really is a civic duty at that point.

Ok, at this point, I have absolutely NO idea what country you are talking about....

It certainly isn't the US, I've never heard anyone here talking about compulsory voting....left or right.

Re:The Very Reason Bitcoin Was Invented

[iggymanz]

you are funny. bitcoin can take days to clear a transaction when the network is congested. bitcoin controls your liquidity!

The credit card companies aren't freaking out, they don't want to deal with an extremely volatile game-token coupled with a poor architecture that causes network congestion. They are not as stupid as a crypto-currency investors

Debit Cards

[PPH]

Buy Bitcoin with a debit card. That's YOUR money (as opposed to CC funds loaned to you by some financial institution) and you can spend it as you please.

Using credit cards to avoid using credit cards

[DogDude]

This whole discussion is hilarious. People are upset about not being able to use their credit cards to buy a "currency" that's designed to avoid using credit cards.

Regulation, really?

[DanDD]

You've got so many concepts all mixed up that I'm not sure where to begin... you seem to think that somehow democracy is going to prevent a government from abusing a monetary policy.

A democracy has never prevented this - if anything, a democracy has sped decline due to the people (demos) voting power (kratia) into their own pockets - welfare and social programs. The first and best example of this was Athens violating treaties with neighboring cities by stealing money and resources that were intended for the defense of all the Greek world, and instead spending it all on local fortifications and public works project - i.e. - the Parthenon. That pissed off many, especially the Spartans, and after a little skirmish of 30 years, Athens fell, Sparta was weakened, and the Greek world never recovered. The Macedonian punk named Alex wasn't Greek, but that is another matter...

Lets fast forward a bit to an empire established as a representative democracy - Rome. Due to years of over spending and failed social and foreign policy, they went broke and tried to solve their fiscal problems with regulation.. That didn't work out too well for them, resulting in every last vestige of their economy running off to the far corners of their empire to escape regulation . Byzantium didn't get the memo and lingered in relative isolation while contemplating their navels for a thousand years. The best and brightest of the eastern half of the Roman empire fled to Persia when their ruler tried to regulate religion, which led to all sort of abominations like algebra and medicine.

Regulation, while starting off as well meaning, generally ends up pissing off more people than it helps.

Fast forward to a time a little more recent, but probably still distant history to most of you, and you may discover that the savings and loan crisis and quantitative easing were, in part, catalysts for the Great Recession, all of which can be trace back to more regulating regulations in the name of social justice

So if you really think regulation and some fanboy cryptocurrency of the month is going to save the economy, or the world, then don't be surprised to meet me while I'm looting the wood from the walls of your house to heat mine, when the economy falls flat on it's face and the empire is overrun by barbarian hoards.

Let the banks assess risk as they see fit. If they don't want to lend you money for some purchase, then get your money some other way, plain and simple. You are even welcome to come try and take my money. Go ahead. I'll be waiting.

The best antidote to banks controlling a cashless future is government regulation. Somebody has to be in charge of the money supply or it'll become unstable and wreck the economy. But giving somebody that power inevitably results in a strong concentrations of power. The only effective counter balance to that is Democracy. This is one of the reasons the left has been pushing for mandatory (and anonymous) voting. It really is a civic duty at that point.

Credit card companies were allowing this??

[bjdevil66]

The banks just watched millions of homeowners gamble with the bank's money, and it blew up in the banks' faces while debtors walked away from the burst bubble. And that was with tangible collateral - not digital currency.

I guess the banks didn't learn much from the Great Recession.

Re:Credit card companies were allowing this??

[vtcodger]

"I guess the banks didn't learn much from the Great Recession."

Of course they learned something. They learned that if you screw up badly enough, the government will bail you out.

What they didn't learn is that there likely are probably limits to the ability of the government to prop things up. What you and I should worry about is the apparent determination of the Republican party to test those limits by resurrecting the same loose money, anti-regulation policies that failed spectacularly in the 2000s.

Is this sucker gonna crash eventually? Most likely, yes.

What this is really about

[rockmuelle]

This is not about volitility or any other type of consumer protection. This is about protecting their points programs.

Basically, people were buying crypto coins on their credit cards, getting the points for the purchase, then immediately selling the coins and paying off the card. The points more than made up for the transaction costs.

Since all these cards were being paid off before any interest accrued, the credit card companies were losing a lot of money on the transactions in the form of reward payouts.

The CC firms will never admit this publicly, but given the number of people I knew who were doing this, I’d bet this is the real reason they’ll disallowing the purchases.

What?

[Opportunist]

But I can still buy penny stocks, right? And options?

Thank god, not all options to trade in highly volatile investments are banned. Only the ones they don't participate in.

The cards still work in Vegas though, right?

[TsuruchiBrian]

If there is one thing I absolutely need the bank issuing me a credit card to do, it is to prevent from buying things that I may not realize are risky.

Re:Thank god, right?

[vtcodger]

Banks protect YOU? ... Let me assure you, they couldn't care less about YOUR welfare. They are interested in THEIR welfare, not YOURS.