Sunday, 22 December 2024
Lloyds Bank bans credit card owners from buying cryptocurrency
Lloyds told its nine million credit card customersthat any attempts to buy cryptocurrencies will be blocked, prompting the price of bitcoin to fall even further from its mid-December high of $19,187 (£13,644) on the Luxembourg-based Bitstamp exchange.
Bitcoin isn't the only cryptocurrency to lose value -ripple and ethereum are among the others to see prices plummet and the cryptocurrency market value has dropped a whopping $67.7billion in just 24 hours.
Lloyds’ move follows the lead of US banking giants JP Morgan Chase & Co and Citigroup and is the latest in a series of legislative changes across the world aimed at reducing the risk of the volatile cryptocurrency market.
Concerns have grown among credit card providers because their customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to purchase the digital currencies.
Lloyds fears it could be forced to pay off unpaid debts if the price of the digital currency continues to fall
Last week MasterCard said customers buying crypto currencies with credit cards fuelled a one percentage point increase in overseas transaction volumes in the fourth quarter.
Other UK banks are expected to introduce similar legislation within the next few weeks.
The Lloyds ban extends to other household names in the banking giant's credit card family, including Bank of Scotland, Halifax and MBNA.
Greg Adams, the managing director of blokt.com, told Express.co.uk the law surrounding cryptocurrency is in desperate need of further clarification.
He said: “The banks are likely feeling the heat right now; they have customers that used debt to enter the market during the recent Bitcoin bull run.
“Customers that entered at the top (close to $20,000) using a credit card will be panicking seeing their investments down over 60 per cent.
“The law regarding buying cryptocurrency on credit is a grey area and is in need of clarity. Banks are probably worried about being liable for losses.”
Thomas Bertani, CEO of Aidoo, told Express.co.uk he thinks the ban will allow Lloyds time to consider the bank’s approach to digital currencies.
He said: ”Banks blocking customers from purchasing crypto in this phase of a hype cycle is an interesting development. On one side it shows that cryptocurrencies have without a doubt spread onto a mainstream consumer's radar and on the other side it proves just how delicate a balance this adoption is.
“There will be a period where leading institutions pause for thought with how they deal with the cryptocurrency market, and rightly so.
“The speed at which crypto is growing makes it necessary for legacy systems to play catch up, and in the case of banks they need to protect themselves and their customers who potentially are not as well versed in crypto trends nor as well prepared for the wild swings in the market.
“Like the Facebook ad ban recently, it's a similar move that allows the banks a period of reflection on how they are going to approach the market in an intelligent and informed way moving forward."
Re-disseminated by The Asian Banker from Express.co.uk
