In a world where purchasing digital currencies is now easier than ever, there are now fewer options. The popularity of the digital currency industry met increasing backlash over the last few weeks, with across-the-board value dips and fear rampant within the market. Now, credit card issuers have started to ban digital currency spending.As of February 2nd, 2018, Bank of America credit cards can no longer be used for digital currency purchases. The news is preceded by similar decisions from Citigroup and Capital One, which do not let users spend credit on digital currency as of late. Additionally, it has not been possible to buy digital currencies with a Discover Card since as early as 2015. JPMorgan Chase became the last of the top five U.S. credit card issuers to officially disallow digital currency spending from their credit cards on February 3rd, 2018. In statements made to the CNBC, a spokesperson from JPMorgan Chase cited high volatility and risk as the leading factors behind their decision.
While the announcement garnered widespread attention within the community, some insist that the decision is not out of left field. The argument could be made that if digital currencies are considered similar to stocks, the decision to prevent credit card purchases is not unprecedented. Currently, most major financial institutions will not allow stocks to be purchased directly with credit cards, requiring insistent investors to find creative workarounds. On the other hand, some argue that credit card rewards serve as an incentivize for individuals to purchase digital currency. Some, though, worry that the decision made by major U.S. banks could have consequences on the already shaken market.
It seems fitting that JPMorgan Chase was the last of the five major banks to enact this policy. Jamie Dimon, CEO of JPMorgan Chase, was famously dismissive of digital currencies in the past. “It’s just not gonna happen, you’re wasting your time. This is my personal opinion. There will be no real non-controlled currency in the world,” said Dimon in 2015. “There’s no government that’s gonna put up with it for long.”However, Dimon expressed regret for getting involved in the discussion in 2017, citing a lack of interest in the topic and a belief that is just a ‘different opinion than other people.’ Similarly, Discover Financial CEO, David Nelms told Bloomberg in January of 2018 that there were not many appropriate uses for bitcoin. “It’s crooks that are trying to get money out of China or wherever,” said Nelms. “Or if someone steals our credit card numbers they’re going to ask for payments in Bitcoin. Those are the only use cases I’m actually seeing today.”Ultimately, financial institutions aim to limit their legal liability and lower their risk when issuing credit cards with this new initiative. For enthusiasts, however, it does mean there are now fewer ways to go about purchasing digital currency. This effect could compound, especially if other countries lead by this example.Image credit: maxpixel
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