Wells Fargo Bans Crypto Purchases Using Credit Cards
Cryptocurrency volatility experienced over the last couple of months, has led to numerous banks banning digital currency purchases from their accounts. One recent example is Wells Fargo, which is the United States’ third largest bank.
In an announcement made a few hours ago, Wells Fargo has stated that customers are now no longer able to buy bitcoin and other digital currencies using the bank-issued credit cards. A bank spokesperson mentioned that: “We’re doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment. This decision is in line with the overall industry.”
It is believed that the risks Wells Fargo referred to include volatility, alongside illegal financing and fraudulent schemes concerning cryptocurrencies. Despite this aspect, Wells Fargo has stated that it will continue to evaluate the decision, based on how the market evolves. With this in mind, if the crypto-boom continues and risks are diminished, then it is possible for the bank to once again allow customers to purchase crypto assets using its credit cards.
It is interesting to consider that back in March, the bank’s ex-CEO mentioned that: "I don't know if banks or credit card companies or any other financial institution should be the arbiter of what an American can buy."
The timing of the decision may be related to bitcoin’s recent price decrease, as the coin has dropped to $6,500 in value, after trading at approximately $7,500 last week.
It is important to point out the fact that few other U.S. banks have taken similar decisions. For instance, J.P. Morgan, Bank of America and Citi have all decided to ban crypto purchases using credit cards. Additionally, a couple of payment processors have taken similar steps, due to fear that volatility may encourage customers to engage in cancelling transactions. In return, this will lead to funds being lost by both payment processors and banks, due to current regulation.
Despite this, Americans can choose to purchase crypto assets using their debit cards, although this means that the cost of purchase cannot be higher than the amount of account funds.