A large number of banks do not allow their customers to buy crypto with credit cards, but with drastic changes happening in the industry, we could see a change in this attitude. There are many reasons why banks don’t allow the purchase of crypto using credit cards. For those involved in crypto, this would seem like banks hating and fearing crypto. Even though this argument makes sense as banks would never do anything that hurts their profit, there are some valid arguments in favor of why banks wouldn’t want customers to purchase crypto with credit cards.
The one that makes the most sense is that things that are brought using credit cards are in effect bought with the bank’s money and have to be paid back. This, along with the fact that the value of any crypto can go to zero, means that their customers could end up not paying it back to the bank. Another is the fact that many jurisdictions require banks to prevent their customers from engaging in crypto activities, while sometimes the banks simply don’t want their customers to engage in crypto activities fearing future liability. But recently, billionaire investor Mike Novogratz came out and said that this could all change as the distrust of banks towards crypto changes.
Credit card purchase
Mike Novogratz, founder of the U.S. based Galaxy Digital, in an interview with Bloomberg, said that banks and other financial institutions will allow the purchase of crypto with credit cards. According to Novogratz, once the industry has regulated financial institutions, the attitude of credit card companies will begin to shift. There are already changes happening, the push for ETF and futures trading on Bitcoin is a clear indication of that. Novogratz said:
“You have got exchanges that are regulated — there are the real players in the game. You are getting more and more pipes — ways for people to participate. One can buy bitcoin on their TD Ameritrade account. That’s a big, big deal.”
Banks have a history of screwing up things when it comes to crypto. One of the most famous instances was that of Forbes contributor, Naeem Aslam. He was stopped from carrying his purchase because the bank couldn’t verify the source of the funds, to which he questioned, “But here is a big question: Should these banks be allowed to control one’s transactions when they already have approved their account”. Novogratz is correct in saying that once the industry gets regulated banks and other financial institutions will join in. But what those regulations will end up doing to the industry is still up for debate.
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