The digital currency nightmare is becoming a reality. Recently, it was reported that the three largest U.S. banks have officially banned the use of their credit cards for cryptocurrency transactions. This move highlights the growing concerns over the risks involved in using credit cards to buy digital assets. Meanwhile, the price of cryptocurrency has dropped for the first time below the $8,000 threshold, signaling a potential shift in market sentiment.
According to international media reports, an increasing number of U.S. credit card providers are stepping back from the crypto trading scene. A few days ago, JPMorgan Chase, Citibank, and Bank of America all announced that they would no longer allow customers to use their credit cards for cryptocurrency purchases.
JPMorgan’s spokesperson, Mary Jane Rogers, explained that the decision was made to avoid the associated risks. She emphasized that the company doesn’t want to expose itself to the volatility and potential fraud linked with digital currencies.
[Image: The three major US banks joined forces to suppress digital currency.]
Bank of America implemented its ban last Friday, rejecting all credit card transaction requests related to known cryptocurrencies, including both personal and corporate accounts. However, the bank clarified that debit cards are not affected by this policy.
Similarly, Citibank announced its own restriction on credit card-related crypto transactions over the weekend. A spokesperson for Citi, Jennifer Bombardier, stated that the bank will continue to monitor and evaluate the policy as the market evolves.
For credit card companies and banks, allowing credit card purchases of digital currency poses significant risks. Some users may take on high levels of debt just to gamble on crypto prices, while others might use stolen cards to buy digital assets, leaving banks vulnerable to financial loss.
As governments have increased regulatory scrutiny on Bitcoin in recent months, the price of the leading cryptocurrency has plummeted nearly 60% in just two months. According to data from Coinbase, Bitcoin’s price fell below $8,000 last weekend, marking a 56% drop from its December 2021 high of $19,450. This is the first time since November that Bitcoin has fallen below the $8,000 level.
Alfred Kelly, President of Visa, recently stated that although Bitcoin can be used in limited contexts, it is not a true currency, and the company will not support any Bitcoin-related transactions. Similarly, Capital One and Discover Financial Services have also expressed their stance against crypto transactions.
David Nelms, CEO of Discover, dismissed cryptocurrency transactions in a recent interview, though he noted that the company's policies could change based on customer demand.
With major banks tightening their controls on digital currency trading, investors are finding it more challenging to enter the market. MasterCard recently revealed that cross-border transaction volumes have risen by 22% this year, partly due to credit card usage for crypto purchases. However, as crypto prices continue to fall, this trend is beginning to slow down.
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