Major US banks have begun forbidding customers from buying Bitcoin with their credit cards. As Bitcoin’s price continues to slump, JP Morgan Chase, Bank of America and Citi are barring their credit card holders from purchasing digital currencies. A Chase spokesperson attributed the decision to concerns about credit risk:
“At this time, we are not processing cryptocurrency purchases using credit cards, due to the volatility and risk involved.”
Banks are afraid customers will purchase large quantities of cryptocurrency that they cannot afford. If prices continue to fall, some buyers would find their investments underwater and might default on their credit card payments.
So far, these banks have stopped short of banning all digital currency purchases. The three banks join Capital One and Discover, who had already begun prohibiting cryptocurrency purchases via credit card.
These five major card issuers are making it more difficult for people to get involved in cryptocurrency by limiting the amount of money able to flow into the crypto ecosystem. Restrictions on funds flowing into exchanges are likely to reduce demand and further deflate the price of Bitcoin and related cryptocurrencies.
At the same time that traditional, staid financial institutions are making it more difficult to purchase crypto, widely-used startups are easing access to the crypto markets. Jack Dorsey’s company Square has enabled easy Bitcoin purchases for most users of their cash app, and Robinhood, a popular stock trading app, has integrated Bitcoin purchases as well.
New supplanting old
The old guard of finance has relentlessly ridiculed Bitcoin. Perhaps the best-known case is Jamie Dimon, who last year called Bitcoin a fraud. Regarding Dimon’s comments, Jeffrey Gundlach of DoubleLine Capital wrote:
“It’s interesting that somebody with that high profile of the establishment is out there with that bold statement.”
Dimon later attempted to walk back his comments, saying he regretted them.
David Nelms, CEO of Discover, also displayed his ignorance on the subject of cryptocurrencies, calling owners of digital currency:
“Crooks... trying to get money out of China or wherever.”
Get with the program
Recent history is replete with traditional, stodgy industries that have been overturned by newcomers. Netflix and video streaming destroyed Blockbuster and the video rental industry. Sears, Kmart and countless other retailers have been supplanted by Amazon. If old-time financial giants don’t begin understanding Bitcoin, and understanding quickly, they are likely to find themselves falling by the wayside also.
As per the famous quote:
“First they ignore you, then they laugh at you, then they fight you, then you win.”