Barclays, a major British banking institution, is set to block all cryptocurrency transactions made using its credit cards starting this Friday, June 27th. This decision, which has been announced on the bank's official website, is driven by concerns over the potential financial risks to customers due to the volatile nature of cryptocurrencies.
The bank has expressed worries that the fluctuating prices of crypto assets could lead to customers accumulating debt that they are unable to repay. They also highlight that crypto assets lack the protection of the Financial Ombudsman Service or the Financial Services Compensation Scheme, leaving customers vulnerable in case of financial loss or if transactions go wrong. This move is a significant step in Barclays' risk management strategy and reflects a cautious approach towards crypto-related activities.
Barclays is joining a growing list of financial institutions, including Lloyds, Virgin Money, JPMorgan, and Citigroup, that have already restricted or banned crypto purchases on credit cards. This trend indicates a broader concern within the banking sector regarding the risks associated with cryptocurrency investments, particularly when funded by credit. Around a dozen U.K. banks, including Halifax, and Starling, have banned crypto transactions.
The decision will prevent customers from using their Barclays credit cards to purchase cryptocurrencies from major exchanges and other platforms. Customers who have been using credit cards for crypto investments will now need to explore alternative methods, such as debit cards or bank transfers.
The Payments Association, a London-based entity, has pushed back against the idea of restricting crypto purchases via credit cards in a response to the FCA's paper, arguing that such a move would unfairly equate digital assets with high-risk activities.
While Barclays is restricting crypto purchases made with credit cards, the bank has also made investments into Bitcoin ETFs. According to a recent SEC filing, Barclays has invested $131 million into BlackRock's iShares Bitcoin Trust (IBIT).
