The ban on credit card transactions comes as the United Kingdom debates possible restrictions.
British bank Barclays has announced that starting Friday, June 27th, it will block all cryptocurrency-related operations carried out through its Barclaycard credit cards, justifying the decision with risks related to the instability of the digital currency market.
The banking institution has justified the ban on crypto-related transactions by citing specific concerns related to the volatile nature of digital assets. According to what is reported on the bank’s official website, the decision was made to “protect customers from potential situations of unsustainable debt”.
“We’re doing this because a fall in the price of crypto assets could lead to customers finding themselves in debt they can’t afford to repay”, Barclays declared. The institution also emphasized the absence of protections for investors in case of problems with cryptocurrency purchases, specifying that these are not covered by the Financial Ombudsman Service nor by the Financial Services Compensation Scheme.
Barclays’ decision is part of a broader debate affecting the United Kingdom regarding the restrictions necessary to limit access to credit for purchasing digital assets. Since 2018, the bank had allowed crypto transactions through its credit cards, enabling customers to purchase digital assets on exchanges. In 2023, the institution managed over five million credit card accounts in the country.
On May 2nd, the UK’s Financial Conduct Authority (FCA) published a consultation document to gather opinions on the possibility of implementing “purchase restrictions” on cryptocurrencies through credit.
The Payments Association, a London-based industry body, has expressed strong reservations regarding proposals to limit crypto purchases through credit cards, responding to the FCA document with arguments against the proposed ban: “Concerns emerge regarding the proposed ban on using credit cards to purchase crypto. This proposal seems to equate cryptocurrency purchases with gambling; instead, consumers should be enabled to make informed choices within predefined credit limits”, the association declared.
The Payments Association highlighted that controls already exist for the use of credit cards in purchasing high-risk assets, including cryptocurrencies. In some cases, banks can block the use of cash for purchasing digital assets, making credit cards a backup option for investors.
