Over the last few weeks credit companies like Capital One, Citi, Bank of America, and Jp Morgan Chase have been on the offense, announcing they would no longer be allowing their customers to purchase cryptocurrency using their credit cards, stating they have fears of their customers accumulating more debt than they can handle.
While this action has been frowned upon by customers looking to use their credit cards to purchase Bitcoin and other cryptocurrencies, this appears to ultimately be a good thing for the economic sector.
With cryptocurrency investors being forced to use their cold hard liquid cash or qualify for other means of funding, banning the use of credit cards essentially forces undercapitalized investors out of the cryptocurrency space, due to them needing to cash in and pay recurring bills.This would ultimately result in the creation of a much healthier cryptocurrency market.
Allowing purchases of cryptocurrencies can create big headaches for lenders, which can be left on the hook if a borrower bets wrong and can’t repay. There’s also the risk that thieves will abuse cards that were purloined or based on stolen identities, turning them into crypto hoards.
Banks also are required by regulators to monitor customer transactions for signs of money laundering – which isn’t as easy once dollars are converted into digital coins.