The news this week is that several US and UK banks have banned the use of credit cards to buy cryptocurrencies (CCs). The reasons stated are unbelievable, such as money laundering, trying to reduce gambling, and protecting retail investors from excessive risk. Interestingly, banks will allow the purchase of debit cards, making it clear that the only protected risks are their own.
You can play at a casino with a credit card, buy guns, drugs, alcohol, pornography, anything and everything you want, but do banks and credit card companies want to ban you from buying their facilities for cryptocurrency? There must be some compelling reasons, and there are NO reasons given.
One of the things banks fear is how difficult it would be to confiscate CC shares when the credit card holder prioritizes payment. It would be much harder than owning a house or a car. The private keys of a crypto wallet can be placed on a memory stick or paper and can be easily removed from the country, with or without a trace of where it is located. There may be a high value in some cryptocurrencies, and credit card debt may never be repaid, leading to a declaration of bankruptcy and a significant loss to the bank. The wallet still has cryptocurrency, and the owner can then access the private keys and use a local CC Exchange in a foreign country to convert and pocket the money. Really bad scenario.
We certainly do not advocate such illegal conduct, but the banks are aware of this possibility and want to close some of them. That can’t happen with debit cards, because banks never take it out of your pocket; the money is immediately withdrawn from your account, and if you have enough money to start with. We strive to find honesty in the bank’s story about reducing gambling and taking risks. Interestingly, Canadian banks do not jump on this bandwagon, perhaps realizing that the reasons given for this are false. The result of these actions is that investors and consumers are now aware that credit card companies and banks have the ability to limit what they can buy with their credit card. It’s not the cards they advertise like that, and it’s likely to come as a surprise to most users, who are quite accustomed to deciding what to buy themselves, especially for CC Exchanges and all the other merchants who have established Trade Agreements with these banks. The exchanges have not done anything wrong – neither have you – but in the banking sector, fear and greed are causing strange things. This further demonstrates the level at which the banking industry feels threatened by Crypto Currencies.
At the moment there is little cooperation, trust or understanding between the world of fiat money and the world of CC. The CC world does not have a central control body where rules can be set in general, which is what every country around the world is trying to figure out what to do. China has decided to ban CCs, embracing Singapore and Japan, and many other countries continue to scratch their heads. What they have in common is that they want to collect taxes on the return on investment in CC. This is not very different from the early days of digital music, as the Internet has been instrumental in the spread and distribution of unlicensed music. Eventually, digital music licensing schemes were developed and approved because listeners agreed to pay a little for their music rather than endless piracy, and the music industry (artists, producers, record labels) accepted reasonable licensing fees rather than nothing. Can there be any compromises in the future of fiat and digital currency? As people around the world are bored with the huge profits of banks and the boredom that banks have surpassed in their lives, there is hope that consumers will be treated with respect and not forever with high costs and unreasonable cuts.
Crypto Currencies and Blockchain technology are increasing worldwide pressure to make a fair compromise – this is a game changer.