Banking giant Wells Fargo has become the latest financial institution to ban its customers from using their credits cards to buy cryptocurrency.
Fortune reports that Wells Fargo — the third-largest US bank with nearly $2 trillion in total assets as of the end of last year — will begin declining transactions made at known cryptocurrency exchanges and brokerage platforms with bank-issued credit cards.
“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency,” a bank spokesperson said in a statement Monday. “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.”
“We will continue to evaluate the issue as the market evolves,” the spokesperson added.
As CCN.com reported, Wells Fargo is the latest in a long line of credit card issuers to bar their customers from making purchases using their cards. JPMorgan, Bank of America, and Citigroup had already enacted similar policies, meaning that customers at the four largest US banks will have to turn elsewhere if they want to buy crypto on credit.
Credit card processors including Visa and Mastercard have also begun charging cash equivalence fees on cryptocurrency purchases, saddling customers with extra fees for these transactions.
These prohibitions have come as the cryptocurrency market has entered a bear cycle, as banks say that they worry investors buying coins on credit will default on their payments.
In January, a survey conducted by student loan marketplace LendEDU found that approximately 18 percent of investors had purchased cryptocurrencies using a credit card and that one-fifth of those investors were carrying the balances rather than paying them off immediately.
A follow-up survey conducted by The Student Loan Report (a LendEDU affiliate) found that 21 percent of university students had used financial aid — loans that in the US are generally not dischargeable in bankruptcy — to invest in bitcoin and other cryptocurrencies.
Notably, this isn’t the first time Wells Fargo has taken a hostile line against the cryptocurrency industry. Last year, the institution cut off banking services to cryptocurrency exchange Bitfinex, which is said to have subsequently used a series of third-party accounts to maintain access to financial services before ultimately finding a banking partner in Puerto Rico.
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Last modified: June 10, 2020 3:38 PM UTC