United Kingdom-based bank Barclays will begin blocking crypto transactions made through its Barclaycard credit cards starting Friday, citing risks associated with cryptocurrency volatility.According to the banks website, the decision was based on concerns over volatile token prices and the lack of regulatory guardrails for investors.
Were doing this because a fall in the price of crypto assets could lead to customers finding themselves in debt they cant afford to repay, said Barclays, adding that:There's also no protection for crypto assets if something goes wrong with a purchase, as they're not covered by the Financial Ombudsman Service and Financial Services Compensation Scheme.A Barclays spokesperson declined to further comment on the decision.Barclays has allowed crypto transactions via its credit cards since at least 2018, enabling customers to purchase digital assets on cryptocurrency exchanges.
In 2023, the company reported over five million credit card accounts in the UK.Barclays ban on crypto purchases comes amid an ongoing debate in the UK on whether more restrictions are needed to prevent residents from purchasing crypto with credit.
On May 2, the UKs Financial Conduct Authority (FCA) published a paper seeking views on whether restrictions should be applied on crypto purchases with credit.Related: Former Barclays Exec to Launch UKs First Regulated Crypto Bank in 2020The Payments Association, a London-based entity, pushed back against the idea of restricting crypto purchases via credit cards in a response to the FCAs paper, arguing that such a move would unfairly equate digital assets with high-risk activities.Concerns arise regarding the proposed ban on using credit cards to purchase crypto.
This suggestion seems to equate crypto purchases with gambling; instead, consumers should be empowered to make informed choices within predefined credit limits.The Payments Association notes that controls already exist for using credit cards to purchase high-risk assets, including crypto.
In some cases, banks may block individuals from using cash to buy digital assets, making credit cards a fallback option.
However, purchasing crypto with a credit card can carry added costs.
According to Bankrate, some issuers treat these transactions as cash advances, which may trigger higher fees and interest rates.Magazine: Legal Panel: Crypto wanted to overthrow banks, now its becoming them in stablecoin fight