By Josiah Wilmoth
The two largest US banks have announced that they are halting credit card transactions related to purchases of bitcoin and other cryptocurrencies.
Two Largest US Banks Ban Cryptocurrency-Related Credit Card Transactions
The world’s largest financial institutions continue to circle the wagons in response to growing consumer interest in cryptocurrencies, even as fintech startups provide investors with new ways to engage with the burgeoning ecosystem.
The latest firms to direct fire at cryptocurrency investors are JPMorgan Chase and Bank of America, the two largest banks in the US.
Both firms have announced that they will start declining credit card transactions used to fund accounts at prominent cryptocurrency exchanges, according to a Bloomberg report.
JPMorgan spokesperson Mary Jane Rogers attributed the bank’s new policy to concerns over credit risk. Surveys indicate that more than one-fifth of investors who use credit cards to purchase cryptocurrencies carry the balance, and prolonged market corrections could render them unable to make their payments.
Bank of America, meanwhile, said that the new policy would not affect debit cards.
The two banks join fellow card issuing giants Discover and Capital One in automatically declining cryptocurrency-related transactions, while Citigroup has said that it is reviewing its policy but has not yet made the decision to halt cryptocurrency purchases.
Legacy Institutions, Fintech Startups Present Stark Contrast in Stances Toward Cryptoassets
These hostile policies from mainstream financial institutions are a stark contrast to those of fintech startups such as Square and Robinhood, who are embracing nascent cryptoasset technology at a much faster pace.
As Strategic Coin reported, Square began a pilot program last year that allowed a select number of users to buy and sell bitcoin through its popular Cash App. This week, the company rolled out the feature US customers in 46 states, making it easier than ever to get onboarded into the cryptoasset ecosystem.
Stock brokerage app Robinhood, meanwhile, plans to add bitcoin and ethereum trading to its platform by the end of February, with more cryptoassets likely to be added in the future. Though Robinhood Crypto will initially only be available to US users in five states, more than one million people have already joined the app’s waiting list.
Strategic Coin is a leading research and advisory firm for companies planning to integrate blockchain capabilities into their business model via utility token launches. Our customer research reports provide qualitative and quantitative analysis of token use cases and platform value. With the Strategic Coin Advantage network of partners, we offer customized services for the pre-launch, full-launch, and post-launch phases of Token Generation Events (TGEs).
Featured Image from Crain’s New York Business