According to Bloomberg, more major banks are choosing not to allow customers to purchase cryptocurrency on credit. JPMorgan, Citibank and Bank of America have followed the likes of Capital One and Discover in disallowing the purchase of cryptocurrency as a matter of policy.
This comes following Stripe’s decision to end bitcoin transactions as a means of payment on its platform, and plenty of rumours about other platforms and banks choosing to adjust their risk policies, putting bitcoin and company into the “medium to high risk,” category.
Importantly, financial institutions such as this are, at their core, risk management institutions. They worked tirelessly to steer themselves clear of areas that could put them in an awkward position – either financially, or from a media standpoint. The fact that these types of institutions are choosing to distance themselves from bitcoin means one of two things – either the concern is based on customer’s ability to repay (unlikely, as credit card debt has enough financial viability on its own to mitigate most risk) or these institutions don’t want to be seen as praying on uneducated investors through allowing irresponsible transactions.
Should the bitcoin market crash entirely, billions of dollars would be lost globally, but also hundreds of thousands of dollars would be lost by individual investors who can’t afford it. Stories of people borrowing against their home to purchase bitcoin are common – although often unsubstantiated – and there would no doubt be a number of heartbreaking stories in the wake of a cryptocurrency demise – temporary or permanent.
After the global financial crisis and stories of banks taking people’s property as repayment for loans they should never have been given in the first place, it’s probably a smart move to risk claims of being too autocratic, rather than media stories about former bitcoin investors being forced to sell everything in order to pay the bank back.
After the last month, cryptocurrencies could do with some good news.