The news this week is that several banks in the US and the UK have banned the use of credit cards to buy cryptocurrencies (CC). These reasons are impossible to believe – such as attempts to combat money laundering, gambling and protect small investors from excessive risk. Interestingly, banks will allow debit card purchases, making it clear that the only hedged risks are their own.
With a credit card you can gamble in a casino, buy guns, drugs, alcohol, pornography, anything and everything you want, but some banks and credit card companies want to ban you from using their facilities to buy cryptocurrencies? There must be some compelling reasons, and they are NOT the reasons given.
One thing banks fear is how difficult it would be to take away CC property when a credit card holder fails to make a payment. That would be much harder than owning a house or a car again. The private keys of the crypto wallet can be placed on a memory stick or a piece of paper and easily removed from the ground, with little or no trace of where they are located. Some crypto wallets may have a high value, and credit card debt may never be repaid, leading to a declaration of bankruptcy and a significant loss to the bank. The wallet still contains cryptocurrency, and the owner can later access private keys and use local CC exchange in a foreign country to convert and store money. A really rude scenario.
We certainly do not advocate such illegal behavior, but banks are aware of the possibilities and some of them want to extinguish it. This cannot happen with debit cards because banks are never out of pocket – money comes from your account immediately, and only if there is enough money on it to start. We try to find any honesty in the bank’s story about reducing gambling and taking risks. It is interesting that Canadian banks do not jump on this collection, perhaps realizing that the stated reasons for that are false. The consequence of these actions is that investors and consumers are now aware that credit card companies and banks really have the ability to limit what you can buy with their credit card. They do not advertise their cards in this way and this is probably a surprise for most users, who are already used to deciding what to buy, especially on the CC stock exchange and all other merchants who have concluded trade agreements with these banks. Stock markets have done nothing wrong – neither have you – but fear and greed in the banking industry are causing strange things to happen. This further illustrates the extent to which the banking industry feels threatened by cryptocurrencies.
At the moment, there is little cooperation, trust or understanding between the world of fiat money and the world of CC. The CC world does not have a central control body in which regulations can be fully applied, and that is why every country around the world is trying to figure out what to do. China has decided to ban the CC, Singapore and Japan are accepting them, and many other countries are still scratching their heads. What they have in common is that they want to collect income tax on CC investments. This is not too similar to the early days of digital music, with the Internet allowing unhindered distribution and distribution of unlicensed music. Digital music licensing schemes were eventually developed and accepted because listeners were fine with paying little for their music instead of endless piracy, and the music industry (artists, producers, record labels) was OK with reasonable licensing fees, not nothing. Can there be a compromise in the future of fiat and digital currencies? As people around the world become increasingly saturated with unprecedented banking profits and the overwork of banks in their lives, there is hope that consumers will be treated with respect and will not forever be burdened with high costs and unjustified restrictions.
Cryptocurrencies and blockchain technology are increasing the pressure around the world to reach a reasonable compromise – – this is changing the game.
Stay tuned!