Wells Fargo, one of the biggest banks in the US, has announced that they are banning customers from purchasing cryptocurrency using their credit cards, but have reiterated that Wells Fargo customers can still use their debit cards on exchanges and to buy currencies like Bitcoin. The under-fire bank, which is the third largest in the US by market capitalization, joins the likes of JP Morgan and Citi, in preventing crypto credit card acquisitions, and they have made the move because of the concern that customers would be at risk of being unable to meet repayments due to wild price volatility.
The Case For Decentralization
While it might be one of the biggest banks in the US, Wells Fargo has come under fire recently, and continues to operate under close Fed scrutiny. The banking group was fined a record $1bn in April 2018 for mistreating its customers. Specifically, they were accused of forcing customers to take out insurance policies that they did not need, and charging unfair mortgage fees; fueling the debate as to why the world needs decentralized financial systems in the first place.
It isn’t the first time that Wells Fargo has hit cryptocurrency headlines, either. In April 2017, iFinex, which is the parent company behind exchange Bitfinex, took Wells Fargo to court because the bank was preventing customers from withdrawing money from exchange accounts via bank transfer.
Fluctuating Prices And Default Credit Repayments
There is some legitimacy to the claims by banks, however. LendEDU conducted a survey last year that found 18% of Bitcoin buyers had used a credit card to purchase the digital currency, and 22% of those buyers struggled to make the required repayments, and the current market conditions suggest that borrowers could face similar difficulties now. Both JP Morgan Chase and Bank of America made a similar move and banned their customers from buying Bitcoin using credit cards, in February of this year. Citigroup also joined the ban at around the same time.
Wells Fargo has said that customers can still use debit cards to purchase crypto.