Customers were banned by Lloyds Banking Group and digital challenger Virgin Money from purchasing bitcoin and other cryptocurrencies with the use of credit cards. However, other big British banks say that they currently have no intentions to impose a clamp down on the volatile assets.
A number of lenders across the globe which includes the Bank of America, JP Morgan Chase, Citigroup, and Capital One have already imposed restrictions on customers who turn to debt in order to purchase digital currencies. They fear of being on the hook for huge losses once the sell-off of the cryptocurrency continues.
However, Barclays, Royal Bank of Scotland (RBS), Tesco, TSB, and Nationwide have no intentions to impose their own bans – even though some banks already noted that they would continue to keep an eye on cryptocurrency borrowing.
A spokesperson from Barclays said that the firm was “keeping this matter under close review.” On the other hand, RBS currently has no plans to modify its policy – in spite of the comparison of the bitcoin market to hell from Dante’s Inferno last December by Sir Howard Davies, the chair of the firm.
The ban of Lloyds Banking Group, which comes into force today across all of the brands of the British banking giant, will mean that cryptocurrency exchanges are barred by the bank, stopping customers from taking on debt in order to purchase the volatile assets.
A spokesperson from Lloyds Bank stated: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”
The said ban will not cover transactions that involve debit cards. However, it will stop customers from making use of credit to speculate on the value of cryptocurrencies amid concerns that the bubble may already be bursting.
A spokesperson for Step Change, a debt charity, said that the group is welcome to “the focus on how using personal credit for investments can cause debt problems.”
“It’s right that banks are looking out for high-risk purchases which could cause consumer detriment should things go wrong, especially considering the fact that credit cards are not a product designed to be used for such risky investments,” said the spokesperson.
The said ban is imposed as holders of bitcoin, and other digital assets continue to experience steep drops. According to the OnchainFX website, bitcoin’s US dollar value alone has dropped by over 13 percent during the last 24 hours, while other major cryptocurrencies have also experienced huge losses.
Before 6 pm today, the price of bitcoin had dropped to below $7,500, having been valued as recently as Sunday morning at over $9,000. However, the one-year returns for speculators of bitcoin are still above 600 percent, despite the huge decline from the pre-Christmas high that neared $20,000 per coin.