זאָל באַנקס זיין באָננינג # ביטקאָין?

Over the past year, the rise of Bitcoin has been exponential with everyone seemingly jumping on this bandwagon. The value of this digital currency has hit the headlines again recently, with many banks banning their customers from purchasing Bitcoin with their credit cards. However, is this a step that the banks should be taking? Or should customers be free to make the decision on whether or not to invest in Bitcoin for themselves? Here, we’re taking a closer look at the relationship between banks and Bitcoin.

Which banks have banned Bitcoin purchases with credit cards?

In recent months, a number of the world’s leading banks have banned their customers from purchasing Bitcoin with credit cards, although this does not apply to debit cards and these can still be used for Bitcoin purchases. Lloyds was one of the first to introduce this ban citing that this new rule was brought in over concerns of customers obtaining large debts with the volatility of Bitcoin as there has already been a sharp fall with this cryptocurrency. This ban from Lloyds will affect over eight million of their credit card customers and this is across four of their banks – Lloyds Bank, Halifax, MBNA and Bank of Scotland. The bank has also stated that they will not be contacting their customers about these changes and they will only be informed of this change should they try to purchase a blocked cryptocurrency.

Since this announcement from Lloyds, Virgin Money has also announced similar rules and credit card holders will not be able to purchase Bitcoin. Other American financial services include JP Morgan, Discover, Capital One, Citigroup and Bank of America.

די ביטקאָין בלאָז

The big question here is whether Bitcoin and other cryptocurrencies are any more volatile than stock trading and other credit card purchases. Furthermore, should banks have the power to decide to ban credit card users from purchasing it? The main argument from banks such as Lloyds is the volatility of Bitcoin. Last week, the currency ended 30% down which was its worst week since April 2013. On the flip side, it is ahead of the $1,000 that it was trading at the same time last year.

אַדווערטייזמאַנט

The cryptocurrency industry is now worth a staggering $120 billion and much of this has been due to investors pumping money into it over the last two years. As can be seen in the infographic below from ETX Capital, who offer a new TraderPro Platform, this rise in Bitcoin follows on from many other economic bubbles. No one knows for sure when, or if, this bubble will burst, hence why some banks are taking extra precautions and are not allowing Bitcoin purchases with credit cards.

[SEE INFOGRAPHIC BELOW]

The future of cryptocurrency and banks

So, what is the future of the relationship between Bitcoin and the banks? For the moment, no other banks have issued any ban or commented on the decision taken by Lloyds and Virgin Money. The UK Finance banking trade organisation has also not released any guidance. However, some have come forward to praise this ban, such as the chief executive of Citizen’s Advice who stated that it showed the bank being proactive in stopping customers running up a debt that they could not afford. For many, this is an issue as why have some banks only stepped in with cryptocurrency transactions and not on other issues such as those use credit cards to gamble online? Some banks have clearly reasoned that this is a bigger risk and it will be interesting to see if any other bans come into place or if more banks follow the lead of Lloyds.

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