Crypto News: What Are the Banks Up To? No Crypto for Credit What?
- Bank of America, Citigroup and JP Morgan Chase are anxious.
- Banks ban credit card purchases of crypto in 2018.
So what's going on with these crypto markets lately. I tell you what I saw recently, a controlled burn of the entire market complete with government intervention and mainstream media fud.
But why? Well in a bubble things progressively inflate and deflate as the bubble experiences periods of growth and contraction and each time the bubble gets progressively larger. This new cryptocurrency space seems to be the future and I think mainstreet investors are now catching on. One of the issues that they face is not having enough capital on hand to really take advantage of it.
Here's where the banks have come in traditionally to close the gap and allow customers to purchase crypto with their credit cards. Well it seems that the large banking interests are tired of inflating this bubble with their own money and they now feel that the crypto markets present too much risk to continue allowing their customers to buy into different cryptocurrencies using capital supplied by them.
Thats right guys, the days of buying Bitcoin, Litecoin, Ethereum or any other hot crypto with your credit card are steadily coming to an end!
If you use your Bank of America-, JP Morgan Chase- or Citigroup-issued credit card to buy cryptocurrency, then you'll have to find an alternative ASAP. According to Bloomberg, the banks have banned crypto purchase using their cards due to the virtual coins' volatile nature. BofA has already started declining credit transactions with known exchanges, though its debit cards aren't be affected by the ban. Citigroup also announced on Friday that it'll no longer process crypto purchases, while JP Morgan Chase's new rule will take effect today.
This is bad news in my opinion because in order to reduce volatility we need less control of the market by whales and more control by individual investors but on the other hand the people buying crypto with credit are most likely on the edge and would be more likely to dump and flip to realize minor profits essentially adding to the volatility. So I guess what I'm saying is that the two sort of cancel each other out. So don't worry or care about this right here!
JPMorgan spokesperson Mary Jane Rogers said the bank has decided to impose a restriction on crypto purchases, because it doesn't want to deal with the risks associated with it. In addition to the difficulties of keeping an eye on purchases -- something they're required to do -- associated with crypto-coins, there's also always the risk of somebody buying more than they can afford to pay. In addition, identity thieves could use stolen credit cards to buy cryptocurrency, and banks have little chance (if any) to get that money back.
The point made about identity thieves seems to make sense to me. Of course they would try to buy cryptocurrencies with stolen credit cards. Essentially it could present a more safety than attempting to extract money from cards in other ways. The crypto markets are and will continue to be extremely volatile until regulation steps in to manage the market. The downside with regulation is that it will most likely calm markets and reduce the opportunity for insane gains essentially defeating the purpose of investing for many people.
These banks aren't the only financial institutions backing away from anything associated with crypto. Capital One Financial and Discover also don't allow cryptocurrency purchases with their credit cards. Discover chief David Nelms even described people using virtual coins as "crooks... trying to get money out of China or wherever." A Coinbase staff member has also revealed in a Reddit post that major credit card networks and providers recently changed the terms of digital currency purchases. The new terms allow them to treat those purchases as a cash advance, which carries additional charges and have higher interest rates.
I would like people to have an opportunity to invest in cryptos because I see them getting bigger stronger and essentially becoming a new digital economy on their own. The fact that people cant buy them with credit cards anymore I think is a good thing. For one I may be completely wrong and if I am assuming people were allowed to keep using credit cards they would actually be worse off then when they started which I would imagine would be really bad considering they are using credit cards to buy cryptos in the first place!
I think the best way to get into cryptocurrency is making a free account right here on Steemit. Start blogging and build a following, earn some steem and sbd and use that to learn how to trade. Then when you get a good feel for markets and exchanges consider investing a bit of capital on a new platform currency like Wanchain or ICX and take a shot at it. Obviously don't invest more than you can afford to lose and if thats how you do it I'd argue that you really can't lose!
What do you guys think about these banks cutting off crypto buyers? Is this just logically thinking on part of the banks? Do you see this affecting markets negatively as a result?
Please leave your thoughts and feedback below.
Thanks for dropping by @Techblogger!
Source:
Banks ban credit purchase of cryptocurrency due to risks - Engadget
Image Sources:
Engadget
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Good post. I don’t think this will have a big impact. I just don’t like banks telling us what we can and can’t do with our money. Maybe if they stopped charging 20 percent rates / that would be good for society instead of interfering with there customers.
Definitely think it's a horrible idea to use a line of credit for the purchase of crypto but I don't think banks should ban it all together. Maybe allow a percentage of your credit limit to be available for purchasing crypto. I guess they are worried about credit worthiness and individuals defaulting on their bill due to over purchase of bunk coins
That sounds like a better arrangement for all parties concerned. Let me put you in touch with JP and BOA real quick, please hold. ;)
Lol! Ya, they can learn a lot from us "know-nothings"
I think you're absolutely right about the controlled burn, intentional FUD, and your thoughts on this market action being characteristic of typical bubble behavior.
Personally, I was pretty annoyed to find out last week (after multiple declined transactions with no explanation) that my card issuer had banned crypto exchange funding purchases without bothering to notify me in any way. They even flagged my first attempted Coinbase purchase after their policy change as possibly fraudulent (???), and I had to call in to confirm it wasn't. Only then did they mention their new anti-crypto policy.
I agree credit probably isn't the most responsible way to make crypto purchases, but--with the combined extreme volatility and growth of the crypto market, credit actually can be a good option--sometimes.
The idea of my bank telling me what I'm allowed to buy rubs me wrong, too. I'll be looking forward to one day soon when these banks will be forced into more customer-friendly business models by the emerging competition which blockchain solutions (in their many forms) will undoubtedly present them. :D
P.S: There is a small typo in your paragraph #6; it says idenetity instead of identity.
I believe it has something to do with a ton of customers maxing out their cards for crypto during November 2017 - January 2018. Buying at all time highs. Their could be a correlation between the people who purchased and those who are missing with late monthly payments I think they made a move to protect their business . They don’t want a ton of dead beats. I could be wrong but seems likely.
This is one of the best explanations I've heard so far! Thanks for this.
You are welcome mate .
In my opinion, banks restricting the buying of crypto on their cards isn’t really that significant.
First of all, banks in Australia have in the last year or so, deemed credit card deposits for online gambling and forex trading to be classed as cash advances. This never used to be the case and was a way for me to easily be able to arbitrage sports books and increase my trading margin in forex. Now the daily interest you pay to use a card is ridiculous and there’s no point in doing it.
Not to mention CitiBank, the king of unethical trading, gambling and rate fixing, doesn’t let clients deposit to gambling accounts for ‘ethical reasons’. Nobody cares about that news and as hilariously ironic as it is, it’s total horseshit. I mean isn’t the fact an unethical, centralised company is telling you what you can and can’t do with your money, the whole point of why crypto is here? Heck, this should be a positive news story for crypto, not a negative.
I really like to think that society as a whole is full of intelligent creatures that can think for themselves, but we’re all still bound by the archaic, self interest protecting, mainstream media that has no interest in breaking from the status-quo. The fact people just lap it up is just sad.
/endrant 😂
Thanks @techblogger for giving us this news and information what is your opinion about bitcoin future
I wonder if you are still able to use bank withdraw or maybe a prepaid debt card would work. You would be drawing from money that's already there so you're not really purchasing the coin on credit. Could be the best way to circumvent the new policy. You could always buy some gold with the credit card (or cash), then send it to www.veldtgold.com and be paid with Bitcoin. Or use the card to buy mining equipment and generate your own coins. Which raises some other questions...
Does this policy extend past exchanges, I wonder? Are they going to prevent me from buying ASICS or anything crypto related? If so, there's always video cards... for "gaming."
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Phew! It's not really encouraging for investors in crypto currencies why because the world today has seen a forecasted future's of some popularized bitcoin be legalized as a legal tender and bank cutting it off will set down the value of these currencies. I don't know what the bank might be scared of but if its the risk involved that doesn't mean they should go ahead and make a cut at this period of time when alot has keyed into crypto currencies. The market will be affected because peole belive what the bank accepts is much more in the future much liable for exchange with raw cash. So its nice a re-think is made about the attitude pulled out on crypto currencies..thats my view.