Visa Says You Can Buy Almost Anything Except Cryptocurrencies
The news this week is that several banks in the US and the UK have banned the use of credit cards to buy cryptocurrencies (CC). The reasons given are impossible to believe, such as trying to reduce money laundering, gambling and protecting the retail investor from excessive risk. Interestingly, banks will allow debit card purchases, making it clear that the only risks that are protected are their own.
With a credit card you can gamble in a casino, buy weapons, drugs, alcohol, pornography, everything you want, but some banks and credit card companies want to prohibit you from using their facilities to buy cryptocurrencies. There must be some credible reasons, and they are NOT the reasons stated.
One thing banks fear is how difficult it would be to seize CC holdings when the credit card holder does not pay. It would be much more difficult than getting a house or car back. The private keys of a crypto wallet can be saved to a memory card or a piece of paper and easily taken out of the country, with little to no trace of their whereabouts. There may be high value in some crypto wallets and credit card debt may never be paid, leading to bankruptcy and a significant loss for the bank. The wallet still contains the crypto currency, and the owner can later access the private keys and use a local CC Exchange in a foreign country to convert and save the money. A dire scenario indeed.
We are certainly not advocating this kind of illegal behavior, but the banks are aware of the possibility and some of them want to shut it down. This cannot happen with debit cards, as banks never pay out of pocket – the money leaves your account immediately and only if there is enough money there to start. We struggle to find some honesty in the bank’s story about reducing gambling and taking risks. It is interesting that Canadian banks are not jumping on this bandwagon, perhaps realizing that the stated reasons for doing so are false. The consequences of these actions is that investors and consumers are now aware that credit card companies and banks really have the ability to restrict what you can buy with your credit card. This is not how they advertise their cards, and it is probably a surprise to most users, who are quite used to deciding for themselves what they will buy, especially from CC Exchanges and all the other merchants who have entered into Trade Agreements with these banks. Exchanges have done nothing wrong, and neither have you, but fear and greed in the banking industry are causing strange things to happen. This further illustrates the degree to which the banking industry feels threatened by cryptocurrencies.
At this point, there is little cooperation, trust or understanding between the fiat world and the CC world. The CC world does not have a central watchdog where regulations can be implemented across the board, and that leaves every country in the world trying to figure out what to do. China has decided to ban CCs, Singapore and Japan accept them, and many other countries are still scratching their heads. What they have in common is that they want to levy taxes on CC’s investment earnings. This is not much different from the early days of digital music, with the Internet facilitating the unrestricted proliferation and distribution of unlicensed music. Digital music licensing schemes were eventually developed and accepted as listeners agreed to pay something for their music, rather than endless piracy, and the music industry (artists, producers, record companies) agreed. with reasonable license fees instead of nothing. Can you be compromised in the future of fiat and digital currencies? As people around the world grow weary of scandalous bank profits and bank overreach in their lives, there is hope that consumers will be regarded with respect and not forever burdened with high costs and unjustified restrictions.
Cryptocurrencies and Blockchain technology increase the pressure around the world to achieve a reasonable compromise, this is a game changer.