x

Abu Dhabi, UAETuesday 19 June 2018

Major British bank joins credit card ban on buying Bitcoin

Lloyds Banking Group ruling will affect some eight million card holders amid major falls in the cryptocurrency’s value

Lloyds Banking Group is the latest international institution to ban credit card transactions relating to Bitcoin. Peter Nicholls / Reuters
Lloyds Banking Group is the latest international institution to ban credit card transactions relating to Bitcoin. Peter Nicholls / Reuters

Britain’s largest retail banking group has banned its credit card customers from buying Bitcoin because of concerns they could rack up major debts, amid sharp falls in the cryptocurrency’s value.

The ban relates to some eight million card holders across the Lloyds Banking Group, which includes Halifax, MBNA and the Bank of Scotland.

It follows similar decisions this month by the Bank of America, JPMorgan Chase and Citigroup in the United States to halt credit card purchases of Bitcoin.

“Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies,” the group said in a statement on Monday.

Bitcoin has soared in value during the past 12 months, rising by as much as 1,800 per cent. The cryptocurrency has subsequently fallen more than 60 per cent since its mid-December peak, but remains more than 600 per cent up since the start of 2017.

The restrictions introduced by the banks are likely to have a continuing downward impact on the value of the currency, experts said.

“It’s a news and views driven market especially with a lot of people recently buying into Bitcoin who aren’t sophisticated investors or understand the technology at a deep level,” said Adam Jason of UK-based Bitcoin investor and adviser Coinsilium.

“But in terms of the viability, it has no bearing. The Bitcoin ecosystem and blockchain is still functioning perfectly normally.”

Bitcoin is the world’s largest cryptocurrency but its market share has fallen by more than half from the 80 per cent it held at the start of 2017 as rivals enter the market. It remains the most readily available cryptocurrency for purchase by credit cards, hence the move by Lloyds and other banks.

The ban by Lloyds, which will be subject to regular review, is part of a regular review of policies to protect customers from major losses. It does not affect people buying Bitcoin using debit cards, the bank said.

_______________

Read more:

Bitcoin skids amid broad cryptocurrency sell-off

_______________

Regulators in the US, South Korea, China, Russia and India have all issued warnings about the cryptocurrency, which senior European law enforcement officials said was the preferred option for cybercriminals. Lenders are also responsible for monitoring money laundering risks, which are greater using the partially anonymised cryptocurrency.

Germany’s central bank has called for global regulation of Bitcoin, and France's finance minister wants tougher rules for cryptocurrencies. The UAE’s Securities and Commodities Authority this week warned investors against any fundraising in cryptocurrencies.

US billionaire Warren Buffett also this month ruled out a foray into cryptocurrencies, warning that the Bitcoin boom will “come to a bad ending”.

Facebook has banned adverts for Bitcoin and other cryptocurrencies on its sites after criticisms of scams promoted in their newsfeed.

Such scams have contributed to the cryptocurrency’s volatility, said Vlad Poliakovsky, a partner of Picatrix Consulting which runs British Bitcoin mining farms. “Regulation sounds tough, it limits your profitability - but it’s absolutely necessary,” he said.