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The headlines this week is that several banks in the USA and the UK have banned the utilization of bank cards to get crypto currencies (CC's). The stated reasons are impossible to believe - like trying to curtail money laundering, gambling, and protecting the retail investor from excessive risk. Interestingly, the banks will allow bank card purchases, making it clear that the only real risks being protected are their own.
With a bank card you can gamble at a casino, buy guns, drugs, alcohol, pornography, everything and anything you desire, but some banks and bank card companies desire to prohibit you from employing their facilities to get crypto currencies? There must be some believable reasons, and they are NOT the reason why stated.
Something that banks are frightened of is how difficult it is always to confiscate CC holdings once the bank card holder defaults on payment. It'd become more difficult than re-possessing a home or a car. A crypto wallet's private keys may be put on a memory stick or a piece of paper and easily removed from the united states, with little if any trace of its whereabouts. There can be quite a high value in some crypto wallets, and the bank card debt may never be repaid, resulting in a declaration of bankruptcy and a substantial loss for the bank. The wallet still contains the crypto currency, and the master can later access the private keys and make use of a local CC Exchange in a foreign country to convert and pocket the money. A nefarious scenario indeed.
We're definitely not advocating this kind of unlawful behavior, but the banks are aware of the chance and some of them desire to shut it down. This can't happen with debit cards since the banks are never out-of-pocket - the amount of money comes from the account immediately, and only if there is enough of your money there to begin with. We struggle to find any honesty in the bank's story about curtailing gambling and risk taking. It's interesting that Canadian banks aren't jumping on this bandwagon, perhaps realizing that the stated reasons for doing so can be bogus. The fallout from these actions is that investors and individuals are now conscious that bank card companies and banks really do have the capacity to restrict what you can buy using their credit card. This is simply not how they advertise their cards, and it is likely a surprise to most users, who are quite used to deciding for themselves what they'll purchase, especially from CC Exchanges and all the other merchants who've established Merchant Agreements with your banks. The Exchanges have done nothing wrong - neither perhaps you have - but fear and greed in the banking industry is causing strange items to happen. This further illustrates their education to that the banking industry feels threatened by Crypto Currencies.
Now there's little cooperation, trust, or understanding between the fiat money world and the CC world. The CC world has no central controlling body where regulations may be implemented across the board, and that leaves each country around the globe trying to figure out things to do. China has decided to ban CC's, Singapore and Japan embrace them, and a great many other countries are still scratching their heads. What they've in common is that they want to collect taxes on CC investment profits. This is simply not too unlike the early days of digital music, with the net facilitating the unfettered proliferation and distribution of unlicensed music. Digital music licensing schemes were eventually developed and accepted, as listeners were OK with paying a little something due to their music, as opposed to endless pirating, and the music industry (artists, producers, record companies) were OK with reasonable licensing fees as opposed to nothing. Can there be compromise in the ongoing future of fiat and digital currencies? As people around the globe get more completely fed up with outrageous bank profits and bank overreach to their lives, there's hope that consumers will soon be regarded with respect and not be forever saddled with high costs and unwarranted restrictions.
Crypto Currencies and Blockchain technology raise the pressure around the world to make a reasonable compromise happen - - this can be a game changer.