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Wells Fargo Bans Cryptocurrency Purchases On Its Credit Cards (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: Wells Fargo customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere. While putting a prohibition on such cryptocurrency purchases for now, Wells Fargo "will continue to evaluate the issue as the market evolves," Shelley Miller, a spokeswoman, said in an emailed statement. Wells Fargo joins Citigroup, JPMorgan Chase and Bank of America, which limited cryptocurrency purchases on their credit cards in February, citing market volatility and credit risks. Lenders have said they're worried they'd be left on the hook if a borrower lost money on a digital currency bet and couldn't repay. A study conducted by LendEDU last year found that roughly 18 percent of Bitcoin investors used a credit card to fund the purchases. Of those, 22 percent couldn't pay off their balance after buying the digital coin.
As someone who's interested in the crypto market and believes it does gave future, I applaud this decision.
Generating debt by buying cryptocurrencies is stupid.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
I don't want a private company telling me what I can or cannot buy with my money.
If you're using a credit card, it's not your money.
If 22% of TV purchasers defaulted, leaving Wells Fargo to pay the bill, you bet your ass Wells Fargo would stop paying for TVs.
The problem is people think they can later resell the Bitcoins in order to pay back Wells Fargo, so they buy more than they can afford to pay back from the paycheck. When Bitcoin prices drop to half of what they were a few months earlier, people can't pay the bill. People don't buy TVs with the thought they can resell it later and thereby pay off the debt.
Didn't anyone read about the tulips?
The tulips were zero sum. For every buyer, there was a seller. For every loser there was a winner.
Cryptocurrencies are different because much of the money is drained out of the system to pay for power. It is negative sum, with more (or bigger) losers than winners.
Generating debt by buying cryptocurrencies is stupid.
More stupid than using your credit card for gambling? Why ban just cryptocurrencies and not all other forms of gambling?
Wells fargo is not alone in banning cryptocurrency purchases. BofA, Chase, Citi, Discover, CapitalOne, Lloyds, and TD already have bans on cryptocurrencies...
FWIW, I seem to remember visa and mastercard already banned charges from known gambling sites after the UIGEA passed... Also several states have laws against buying securities/stocks using credit cards.
The same laws that allow you to determine what you do with your money. It is THEIR money, they get to choose what they do with it not you. A credit card is in effect you asking them for an unsecured loan which they are well within their rights to refuse.
My credit rating is 800 and all my accounts are on full monthly autopay. They are nothing more than intermediaries that take a cut from every transaction. Even aside from that, only a complete idiot thinks that blanket credit denials for an entire category of spending involves any risk assessment.
FWIW, right now the big banks are also considering a restriction and/or ban on using credit cards to purchase guns as well. Citigroup has already required all of their corporate customers that sell guns limit sales of bump-stocks and high-capacity magazines.
Also, the New York Comptroller is pushing for BofA, Chase and other banks to reclassify merchants that sell guns as high-risk merchants on par with those that sell drugs like opiods. Merchants considered high-risk have to pay significantly more to payment processors and are generally subject to tight limits on chargeback ratios leaving many to abandon accepting credit cards for purchases because of the risk that the "intermediaries" won't pay the charges that their customers will rack up...
I can already smell the scam: Get a credit card, buy cryptocurrency, tear up credit card and refuse to pay. Technically, all you have is 'tokens' that're not legal tender in any government. They are technically worthless, so they can't be seized by a court.
And even if by some twist of logic, some court did decide to rule Cryptocurrency isn't a token, but it is in fact a legal tender, or commodity, or whatever.. still, you're going to have a real tough time trying to extract cryptocurrency from any individual.
The normal collections methods are not going to affect cryptocurrencies in any way, shape or form. In REALITY, cryptocurrency coins are literally NOTHING.
But I imagine a clever criminal will find a way to mask the purchase to make this work out, anyway. So .. no solutions here, nothing more than a: Good luck with that!
Their money, Their rules. A credit card is not a guarantee of funds for anything you desire. You sign up to terms and conditions for an unsecured loan and part of those conditions are rules that determine things they will not extend credit for. Also part of those rules you agree to is they can change that list anytime they deem fit. This is status Quo for pretty much all credit cards, While I don't deal with Wells Fargo I imagine they are the same.