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Banks censor credit card accounts

BIScom Subsection: 
Author: 
Editorial Staff

There is something off here: you can use your credit card to buy pornography of the most awful and depraved kinds ,you can use your credit card to place illegal wagers or take part in illegal gambling, you can use your credit card to buy drugs, legal and illegal from illegal or at least dubious sources or to put money at risk in pump and dump schemes and the banks and credit card companies are adamant that they cannot identify and prevent such transactions. And yet, when their own business models are under threat, suddenly they are able to identify and prevent the purchase of cryptocurrencies such as bitcoin, Ethereum and Ripple plus many, many more.

The latest bank (at the time of writing) to announce that it is to ban its credit card holders from purchasing crypto-currencies is Lloyds Bank of the UK. The news may have an element of diversion about it:the bank has also announced the closing of dozens of branches across its Network that includes Lloyds, Bank of Scotland and Halifax. Be that as it may, Lloyds is not the only bank to make such a statement in recent days.

The Bank of America and JP Morgan announced a similar ban at the end of last week. In the case of JP Morgan, one has to wonder whether it is, at least in part, because the boss, Jamie Dimon, has demonstrated a fundamental lack of understanding of anything to do with cryptocurrencies. Citigroup has made a similar announcement.

Lloyds says that there are prudent commercial reasons for the ban: as buying bitcoin reached fever pitch at the end of 2017, the price quadrupled to more than USD20,000. Then the inevitable crash happened, leaving late buyers sitting on a loss. Lloyds is saying, in effect, "if you want to speculate, do it with your own money, not with ours." The decision is driven, the bank says, by concerns that it could be left with a large amount of credit card lending that customers cannot service or settle.

That all makes perfect and sound commercial sense. But the question remains:if those transactions can be identified and blocked, why can't transactions that are actually illegal be similarly treated?