The UK’s biggest financial services provider to over 30 million customers, Lloyds Banking Group, plans on issuing a ban to prevent its clients buying cryptocurrencies using credit cards.
Lloyds is responsible for the operation and management of its eponymous bank, Lloyds Bank, in addition to several other banks and financial services providers located throughout the UK such as Birmingham Midshires, Bank of Scotland, Lex Autolease, Halifax, Scottish Windows, MBNA, Colleys, Black Horse, AMC, and LDC.
Lloyds Bank has over 9 million issued credit cards active at the moment. This means millions of UK citizens will be prevented from purchasing Bitcoin using credit. Curiously enough, this decision comes in the wake of a massive Bitcoin price depreciation. The Telegraph reports that Lloyds customers can still use their debit cards to purchase cryptocurrencies, adding Lloyds is the issuer of a quarter of all credit cards in the UK.
The Telegraph reported this decision has been active since Monday February 5th. In the event of a Lloyds customer attempting to purchase cryptocurrencies using their credit cards, they will be prevented from doing so using a blacklist which has flagged certain sellers.
A Lloyds spokesperson has confirmed this information via an email and stated that all Lloyds Bank-affiliated institutions such as MBNA, Halifax, and the Bank of Scotland will decline any credit card transaction made to purchase cryptocurrencies.
It is further asserted that this decision has been made in an attempt by the bank to protect its customers from incurring huge losses from the immensely volatile crypto industry. This logic is not entirely unfounded. Gavin Brown, a finance lecturer from the Manchester Metropolitan University, previously noted that the only way for an average person to get a foot in the door in the Bitcoin industry is to purchase Bitcoin using credit. However, considering the recent price dip, the chances for an immense loss with no way to repay it is considerably more prominent than it was a few weeks ago.
The Telegraph notes that Lloyds is concerned that in the event of a bad debt resulting from a major loss, Lloyds might have to foot the bill themselves.
Lloyds has expressed its concern for the nefarious activities that are so often associated with cryptocurrencies such as money laundering, drug dealing, Dark Web activities, and terrorist funding. It is predicted that more banks in the UK and across the world will soon follow Lloyds’ example.
Some banks are already demonstrating a hostile attitude towards cryptos, especially when it comes to providing credit services. Three major US banks, Citigroup, JP Morgan, and Bank of America, confirmed last week they are prohibiting customers from purchasing cryptos with credit cards.