Lloyds Bank Group has banned its customers from buying Bitcoin and other crypto-currencies on their credit cards.
The ban, starting today, will not apply to debit cards, only to the bank’s credit card customers.
The move follows a sharp fall in the value of digital currencies, prompting fears about people running up debts.
Lloyds Bank Group is concerned it could end up footing the bill for unpaid debts should the price continue to fall.
it could end up footing the bill for unpaid debts
In that case they shouldn’t have offered credit in the first place.
Sounds like somebody wanted to be badly on the news no-matter what with…
This is interesting for a reason people aren’t noticing. Most credit card terms strictly forbid buying ‘cash and cash equivalents’ unless the purchase is correctly coded as a cash transaction.
This could be interpreted that Lloyds is now acknowledging Bitcoin as a currency, not an asset, in a way.
I’m not so sure it has any significance like that (not that how LBG classifies bitcoin would really matter anyway).
Lloyd’s haven’t said you can buy them if you code it as a cash transaction, they have just said you can’t buy them.
Or, credit companies (my ex-colleagues from CapOne told me before) may monitor risky transactions of their customers, for example if they notice that a customer has been spending a lot of credit in gambling, they’d flag them up and monitor/ take actions as those customers are very likely to run into debt problems, ie the lender ends up taking a loss when borrows can’t pay.
So you could also argue that Lloyds is recognising bitcoin trading as gambling rather than recognising bitcoin as an investment!
Going out on a bit of a limb, here, but bitcoin trading is gambling.
Very true, both are risky behaviours. Remember, this isn’t banks trying to protect your from yourself as I saw asserted. It’s banks trying to protect themselves from you, if you’re a risk-taking person.
I couldn’t agree more!
Makes sense. Assume people are putting large sums of money on their CC to purchase Bitcoin under the assumption that it’ll gain in price, so they can then pay off their CC by selling some of their Bitcoin while letting the rest still appreciate. With Bitcoin having halved in value now, there’s probably quite a few people out there who can now no longer pay off their CC even if they sold all the Bitcoin they’d purchased.
tl;dr, Bitcoin is increasingly being recognised as an unsustainable bubble
It’s 13% down today 
Agreed. Honestly, it was irresponsible of banks to not try to detect and block these purchases before. We don’t need another lending crisis.
Yet another knot in a wide string of events that is going to kill Cryptocurrency.
It won’t take long sadly 
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(All opinions are my own)
How is this any different from trading/investing in stocks? Genuine question.
Apart from the volatility, it isn’t different.
Consider this: if someone changes GBP to EUR to make s purchase, that’s just s transaction. If they change GBP to EUR with the intention to change it back at a later date, that’s a gamble on the exchange rate.
With stocks and shares, no one buys them to use them for anything. They are only bought with the intention of at some stage selling them, and obtaining an income from dividends. That’s s gamble because no one knows for certain that there will be a dividend or a profit.
But life’s full of gambles. I’m not saying it’s wrong to gamble on the future value of bitcoin. All investments are gambles; it’s just the odds that change.
I guess there are not many stocks that can claim to have more than doubled, and then fallen back to its original value, within just over two months (end Nov: $8,000, mid Dec: $19,000, today: $8,000).
And the problem when you get these sort of rises (Nov -> Dec) is that all sorts of “investors” who have no idea what they are doing, are going all in, including apparently going into debt, which is a terrible, terrible idea when buying into something as volatile as this.
Let’s assume Bitcoin is a genuine currency (and that’s something I might dispute). In that case, it’s a zero-sum game like all currency trading. Add in exchange fees (the house take) and boom - suddenly, over enough time, everyone loses.
The stock market isn’t a zero sum game because companies and economies tend to grow. One business’ success doesn’t require another’s failure.
At the end of the day, shares prices are still based on the underlying value of the company - it’s a function of its earnings, dividends yadayada. Buying shares make you a part-owner of the company and it’s a lot more tangible in value.
Bitcoin however is based on nothingness - its iinherent value is purely based on market demand and supply (and largely driven by speculation as you can’t really use bitcoin in a lot of places), and not based on any tangible asset.
Or precisely the opposite, since it feels the need to specify it separately; not falling under the ‘cash’ banner.
By that logic, it’s a gamble going to work each day because there’s a slim chance a meteorite will fall out of the sky and destroy your office
This is actually incorrect. Share prices are often completely removed from the inherent value of the asset (I.e. Tesla’s insane share price despite $619 million of losses in 2017). This is why people will look at the ‘Earnings per Share’ of a certain stock to assess whether it’s overvalued by the market.