The news this week is that several banks in the USA and the UK have banned the use of charge cards to get crypto currencies (CC’s). The stated reasons are impossible to think – like wanting to curtail money laundering, gambling, and protecting the retail investor from excessive risk. Interestingly, the banks allows bank card purchases, which makes it clear that the only risks being protected are their own.
With a credit card you can gamble at a casino, buy guns, drugs, alcohol, pornography, everything and anything you desire, but some banks and charge card companies wish to prohibit you from utilizing their facilities to get crypto currencies? There should be some believable reasons, and they’re NOT the causes stated.
A very important factor that banks are frightened of is how difficult it would be to confiscate CC holdings when the charge card holder defaults on payment. It would become more difficult than re-possessing a residence or a car. A crypto wallet’s private keys can be placed on a memory stick or a bit of paper and easily removed from the country, with minimum trace of its whereabouts. There can be a high value in certain crypto wallets, and the charge card debt may never be repaid, leading to a declaration of bankruptcy and a substantial loss for the bank. The wallet still provides the crypto currency, and the owner can later access the private keys and make use of a local CC Exchange in a foreign country to convert and pocket the money. A nefarious scenario indeed.
We’re certainly not advocating this sort of unlawful behavior, however the banks are alert to the likelihood and a number of them wish to shut it down. This can’t happen with debit cards because the banks are never out-of-pocket – the money comes from your account immediately, and only if there is enough of your money there to begin with. We struggle to find any honesty in the bank’s story about curtailing gambling and risk taking. It’s interesting that Canadian banks aren’t jumping with this bandwagon, perhaps realizing that the stated reasons for doing so can be bogus. The fallout from these actions is that investors and customers are now aware that charge card companies and banks really do have the capacity to restrict what you can get with their credit card. This is not how they advertise their cards, and it is probable a shock to many users, who’re quite used to deciding for themselves what they will purchase, especially from CC Exchanges and all of those other merchants who have established Merchant Agreements with these banks. The Exchanges have inked nothing wrong – neither maybe you have – but fear and greed in the banking industry is causing strange things to happen. This further illustrates the degree to which the banking industry feels threatened by Crypto Cur ieo crypto rencies.
Now there is little cooperation, trust, or understanding between the fiat money world and the CC world. The CC world does not have any central controlling body where regulations can be implemented across the board, and that leaves each country around the world trying to find out what to do. China has decided to ban CC’s, Singapore and Japan embrace them, and many other countries continue to be scratching their heads. What they’ve in keeping is that they want to collect taxes on CC investment profits. This is not too unlike the early days of digital music, with the internet facilitating the unfettered proliferation and distribution of unlicensed music. Digital music licensing schemes were eventually developed and accepted, as listeners were OK with paying a little because of their music, as opposed to endless pirating, and the music industry (artists, producers, record companies) were OK with reasonable licensing fees as opposed to nothing. Can there be compromise in the continuing future of fiat and digital currencies? As people around the world get more completely fed up with outrageous bank profits and bank overreach into their lives, there is hope that consumers is going to be regarded with respect and not be forever saddled with high costs and unwarranted restrictions.