Banks Ban Use of Credit Cards To Buy Bitcoin

The money center banks, CitiGroup, Capital One,Bank of American and JP Morgan have now banned the use of their credit cards to buy Bitcoin.

This is in reaction to many consumers who are leveraging their purchases using credit card debt.

As the value of Bitcoin plunges, there is no “margin” mechanism that requires consumers to put up more collateral to protect the banks.

Thus, the banks are protecting themselves against consumers who will eventually default on this debt.

Money laundering is another concern expressed by the banks, but it’s likely that that issue is a far lesser one than collecting on the bad debt.

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
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