Banks in Britain and the US have banned the use of credit cards to buy Bitcoin and other “cryptocurrencies”, fearing a plunge in their value will leave customers unable to repay their debts.

Lloyds Banking Group, which issues just over a quarter of all credit cards in Britain, and Virgin Money said they would ban credit card customers from buying cryptocurrencies, following the lead of US banking giants JP Morgan Chase and Citigroup.

The move is aimed at protecting customers from running up huge debts from buying virtual currencies on credit.

Concerns have arisen among credit card providers because their customers have increasingly been using credit cards to fund accounts on online exchanges.

Other banks said on Monday that they would continue to allow credit card customers to buy cryptocurrencies.

Barclays is Britain’s leading credit card issuer with a market share of around 27 percent through its Barclaycard brand.

Spain’s second-biggest bank, BBVA, also said it has no restrictions in place on such purchases.

Last week Mastercard Inc, the world’s second biggest payments network, said customers buying cryptocurrencies with credit cards fuelled a 1percentage point increase in overseas transaction volumes in the fourth quarter.

At that time, Bitcoin was staging a spectacular rise in value, reaching a peak of $19187 on December 16 on the Luxembourg-based Bitstamp exchange.

However, it has since fallen dramatically and on Monday was down by 11percent.

The decision on whether to allow credit card users to buy cryptocurrencies is a credit risk decision made by the card-issuing banks, said Mastercard. 

– Reuters

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