It is no hidden secret that cryptocurrency is volatile in the financial market. It is not treated as a legal tender since it cannot be used in terms of physical currencies. Thus, some financial institutions do not approve of the purchase of cryptocurrency on their credit cards.
Wells Fargo’s Cryptocurrency Banned On Credit Card Use
One of America’s largest banks by assets, Wells Fargo, announced that their customers would have to forego the purchases of digital currency in the form of cryptocurrency on its credit cards. San-Francisco based Wells Fargo’s head, along with other financial members agreed upon the prohibition of credit purchase of cryptocurrency. Everyone welcomed the decision to avoid multiple risks that spelled out in the process. The rule was implemented across the various branches of Wells Fargo to safeguard their interest. The officials fear that the volatile nature of cryptocurrency could pose a threat to their organization. After a thought-out meeting, the members of Wells Fargo rejected the plea to allow the purchase of cryptocurrency on the bank’s credit by right of veto. The consensus agreement will be implemented with immediate effect.
Wells Fargo Influences Other Financial Institutions
The implementation of the cryptocurrency ban on Wells Fargo’s credit card has sent a ripple effect across other financial institutions, and banks. It is anticipated that other financial institutions may follow the footsteps of Wells Fargo, which will lead to a surge in preventing credit exchange of cryptocurrency. Following the decision of Wells Fargo, J.P. Morgan Chase, Citigroup, Bank of America also indulged in protecting their payment scheme for cryptocurrency. A member of J. P. Morgan claimed that the decision to ban cryptocurrency was a wise one as it is an endeavor to not only safeguards the interest of the bank but also to protect the customers from steep rise and fall of the fluctuating market. In continuation, J. P. Morgan added that other banking processes might be disrupted by blockchain technology. It could risk the payment process as well as upset the smooth flow of services provided to the customers. The neighboring countries, such as Canada’s Toronto-Dominion Bank (TD), followed suit in rolling out orders of disallowing the purchase of cryptocurrencies on their credit cards. In justification of their decision, they said that they are implementing the ban to protect their customers from the risk and danger of volatile cryptocurrency. At the same time, Wells Fargo also reserves the right to re-evaluate the decision based on the evolution of the market. However, the current decision will follow.
Oversea Banks Also Impacted By Ban On Cryptocurrency Purchase on Credit Cards
A leading private bank of India, HDFC Bank nodded unanimously to the decision of Wells Fargo on implementing a ban on credit card purchase of cryptocurrencies. HDFC bank also announced that to preserve the interest of its customers, it will discontinue the use of credit cards to purchase the cryptocurrencies.
Furthermore, Lloyds Banking Group, UK Bank, and Virgin Money of Australia, the UK, and South Africa supported the move consensually.
Hurdles Of Cryptocurrency On Credit Card
The financial institutions and banks are making it difficult for investors to exchange cryptocurrencies due to the ban on credit card use of digital currency purchases. Furthermore, the ban is creating hurdles in investing and purchasing digital currency. Since cryptocurrency has a high value, it becomes a challenge for investors to arrange liquid money to purchase digital currencies. Backing out of banks will prove to be a set back for the key players of cryptocurrency.
Financial Institutions may secure their position by prohibiting credit use of cryptocurrency, but this could affect the financial market to a great extent. A steep dive in the purchase of digital currency is apprehended in the next few months. As a result of which, the stock market may also take a plunge. The global monetary forum may have to intervene to regulate the financial market. In such circumstances, financial institutions and banks may have to reconsider their decision.