The news recently is that several financial institutions in the USA and the UK have banned the use of credit cards to buy crypto currencies (CC's). The particular explained reasons are impossible to believe - like seeking to curtail money laundering, gambling, and protecting the retail investor from too much risk. Interestingly, the financial institutions enables debit card acquisitions, rendering it clear that the only risks being protected are their own.
Along with a credit card you can gamble at a casino, buy guns, drugs, alcohol, pornography, everything and anything you desire, but some banks and credit card companies want to prohibit you from using their facilities to get crypto currencies? There should be some believable reasons, plus they are NOT the reasons stated.
One thing that banks are afraid of is how difficult it would be to confiscate CC holdings when the credit card holder defaults on payment. It would be much more difficult than re-possessing a home or a car. A crypto wallet's private keys can be put on a memory stick or a piece of papers and easily removed from the, with little or no trace of its whereabouts. Crypto News
There can be a high value in some crypto wallets, and the credit card debt may never be repaid, leading to a declaration of bankruptcy and a significant loss for the bank. The particular wallet still provides the crypto currency, and the proprietor can later access the private keys and use a local CC Exchange in a foreign country to convert and pocket the money. A nefarious situation indeed.
We are definitely not advocating this kind of unlawful behavior, but the banks are aware of the probability and some of them want to shut it down. This can't happen with debit cards as the banks are never out-of-pocket - the money comes out of your account immediately, and later if there is enough of your hard earned money there to get started on with. We struggle to find any honesty in the bank's story about curtailing gambling and chance taking. It's interesting that Canadian banks aren't bouncing on this bandwagon, perhaps realizing that the mentioned reasons for doing so are bogus. The fallout from these actions is the fact buyers and consumers are now aware that credit card companies and banks really do have the ability to restrict what you can purchase with their credit card. This may not be how they advertise their credit cards, and it is likely a surprise to most users, who are quite used to deciding for by themselves the actual will purchase, especially from CC Exchanges and all another merchants who have established Merchant Agreements with these banks. The Exchanges have done nothing wrong - neither have you - but worry and greed in the banking industry is triggering strange what you should happen. This particular further illustrates the amount to which the banking industry feels threatened by Crypto Currencies.
At this point there is little cooperation, trust, or understanding between the fiat money world and the CC world. The CC world does not have central controlling body where regulations can be executed across the board, and that leaves each country around the world trying to puzzle out what to do. Tiongkok has decided to ban CC's, Singapore and Japan adopt them, and many more countries are still scratching their heads. What they have in common is that they want to acquire taxes on CC investment profits. This is not too unlike the first days of digital songs, with the internet assisting the unfettered proliferation and distribution of unlicensed songs. Digital music licensing schemes were eventually developed and accepted, as listeners were Cofortable with paying a little something for their songs, rather than endless pirating, and the music industry (artists, producers, record companies) were OK with affordable licensing fees rather than nothing. Will there be compromise in the future of fiat and digital currencies? Since people around the world get more fed up with outrageous bank profits and bank overreach into their lives, there is hope that consumers will be regarded with respect and not be forever saddled with high costs and unprovoked restrictions.