For a little while it seemed like Bitcoin was the future and that anyone prepared to jump in on the action could make a nice bit of cash.
But now the tables look like they’re starting to turn as Lloyds bank announces it is banning its eight million credit card customers from buying Bitcoin and other cryptos following serious falls in the value of digital currencies.
The ban, which is coming into force today, is bad news for anyone with credit cards at Lloyds Bank, Bank of Scotland, Halifax and MBNA customers.
Explaining the ban, a Lloyds spokeswoman told the Guardian: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”
This is one of the most serious moves against cryptocurrencies in the UK to date – and it comes after Bitcoin’s value more than halved in recent months.
There are even fears that people are running up massive debts in an effort to grab a part of the Bitcoin boom. However, commenting on the ban, Ian Williams from debt advice service Gregory Pennington confirmed that while credit card debt generally is a massive issue, debts from cryptos are still nothing compared to traditional problems like online gambling.
He told ShortList: “Credit card debt is the most common debt held by people seeking debt advice from us here at Gregory Pennington. We don’t dig too deeply into how people have run up their debts – we tend to focus more on helping them find a solution. But I would suggest that online gambling would be a much bigger issue amongst clients than speculating in bitcoin.”
In response to the ban, Citizens Advice Chief Executive, Gillian Guy added: “This is a welcome announcement from Lloyds, and shows they recognise the risks of credit card customers running up debt they can’t afford - something that Citizens Advice sees the impact of every day.
“But crypto-currencies are just one part of the problem - one of the key causes of problem debt is credit card lenders providing credit limit increases to people already in financial difficulty without their consent. That’s why we’re calling on all credit card companies to play their part in making sure people do not take on unaffordable debt by scrapping uninvited credit limit increases.”
And a spokesman for debt charity StepChange added: “We welcome the focus on how using personal credit for investments can cause debt problems, so it’s right that banks are looking out for high risk purchases which could cause consumer detriment should things go wrong, especially considering the fact that credit cards are not a product designed to be used for such (risky) investments.”
There were similar bans across the pond this weekend at JP Morgan Chase, Bank of America, and Citigroup. And there are even some rumours that entire governments could bring in their own clampdowns on cryptos – including in South Korea where they’ve proved to be extremely popular.
The volatility around the price of cryptocurrencies has also sparked some particularly strange conspiracy theories and some even stranger stories of people getting rich super-fast.
A couple of weeks ago bitcoin investors started blaming the moon for a price crash. Alexander Wallin, chief executive officer of trading social network SprinkleBit in New York, said: “The January drop is a recurring theme in cryptocurrencies as people celebrating the Chinese New Year, aka Lunar New Year, exchange their crypto for fiat [real] currency. The timing is about four to six weeks before the lunar year, when most people make their travel arrangements and start buying presents.”
And it was also revealed that 50 Cent had inadvertently become a Bitcoin millionaire after he let fans buy his fifth studio album, Animal Ambition, with the crypto. Good for you Fiddy!
One of our team even made a fair bit of cash by investing in crypto – which you can read all about here.
(Images: Pixabay / Rex)