Barclays Blocks Crypto Card Purchases
Barclays to Block Crypto Credit Card Transactions
Starting June 27th, UK-based bank Barclays will prohibit cryptocurrency transactions made using its Barclaycard credit cards. This decision, announced on their website, cites the inherent volatility of crypto assets and the absence of robust regulatory safeguards for investors as key concerns.
Barclays stated that the price fluctuations of cryptocurrencies pose a significant risk of customers incurring debt they cannot repay. The bank also highlighted the lack of protection for crypto assets through mechanisms like the Financial Ombudsman Service and Financial Services Compensation Scheme.
"There's no protection for crypto assets if something goes wrong with a purchase, as they're not covered by the Financial Ombudsman Service and Financial Services Compensation Scheme."
A Barclays spokesperson declined to provide further comment.
This move marks a significant shift for Barclays, which has allowed crypto transactions via its credit cards since at least 2018. The bank reported over five million credit card accounts in the UK in 2023.
The ban comes amidst ongoing discussions within the UK regarding tighter regulations on crypto purchases made with credit. On May 2nd, the UK's Financial Conduct Authority (FCA) published a paper seeking feedback on whether restrictions should be applied to such transactions.
Payments Association Response
The Payments Association, a London-based organization, responded to the FCA's paper, arguing against restricting crypto purchases using credit cards. They contend that such a move unfairly equates digital assets with high-risk activities like gambling and that consumers should be able to make informed choices within their existing credit limits. They noted that existing controls already manage high-risk asset purchases, with some banks even blocking cash purchases of digital assets.
However, it's crucial to remember that using credit cards to buy crypto can incur additional costs. Some issuers treat these transactions as cash advances, leading to higher fees and interest rates.
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