The news this week is that several banks in the United States and the United Kingdom have banned the use of credit cards to purchase cryptocurrencies (CC). The reasons given are impossible to believe – like trying to limit money laundering, gambling and protecting the retail investor from excessive risk. Interestingly, banks will allow debit card purchases, making it clear that the only risks protected are their own.
With a credit card, you can play in a casino, buy guns, drugs, alcohol, porn, 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 credible reasons, and these are NOT the stated reasons.
Banks are afraid of the difficulty of confiscating CC assets when the credit card holder defaults. It would be much more difficult than repossessing a house or a car. The private keys of a crypto wallet can be placed on a USB stick or a piece of paper and easily removed from the country, with little or no trace of where it is located. Some crypto wallets may have a high value and credit card debt may never be repaid, leading to bankruptcy and significant loss to the bank. The wallet still contains cryptocurrency, and the owner can later access private keys and use a local CC Exchange in a foreign country to convert and pocket the money. A harmful scenario indeed.
We certainly do not advocate this type of illegal behavior, but banks are aware of this possibility and some of them wish to close it. This cannot happen with debit cards because banks are never out of their pocket – money immediately comes out of your account, and only if there is enough money to start. We are struggling to find honesty in the history of banking on the reduction of gambling and risk taking. It is interesting to note that Canadian banks are not jumping on this bandwagon, perhaps realizing that the reasons given are wrong. The fallout from these actions is that investors and consumers are now aware that credit card companies and banks really have the ability to restrict what you can buy with their credit cards. This is not how they advertise their cards, and it is probably a surprise to most users, who are quite used to deciding for themselves what they will buy, by particularly with CC Exchanges and all the other merchants who have concluded agreements with these banks. The stock exchanges have done nothing wrong – neither have you – but fear and greed in the banking industry are causing strange things. This further illustrates the extent to which the banking industry feels threatened by cryptocurrencies.
At this stage, there is little cooperation, trust or understanding between the world of fiat money and the CC world. The CC world does not have a central control body where regulations can be implemented in all areas, which leaves every country around the world trying to figure out what to do. China has decided to ban the CC, Singapore and Japan, and many other countries are still scratching their heads. What they have in common is that they want to collect taxes on CC investment profits. It's not too different from the beginnings of digital music, with the Internet facilitating the unhindered proliferation and distribution of unlicensed music. Digital music license programs were eventually developed and accepted, as listeners were willing to pay a little bit for their music, rather than endless piracy, and the music industry (artists , producers, record labels) was OK with reasonable license fees rather than nothing. Can there be a compromise on the future of fiat and digital currencies? While people around the world are more fed up with outrageous banking profits and excess banking resources in their lives, there is hope that consumers will be viewed with respect and will not be eternally grappled with. high costs and unjustified restrictions.
Cryptocurrencies and Blockchain technology are increasing the pressure around the world for a reasonable compromise to happen – – it is a game-changer.