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

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.

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: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: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?

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.

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.

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.

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: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.