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RE: Banks ban credit crypto purchases, and that is good news.
I have seen the reports of people's bank accounts being closed for purchasing crypto which is indeed worrisome. I can see the side of the bank worrying about incurring debt snd increased risk, but none of that exists when someone is using their own, non credited funds.
If all major banks were to ban crypto purchases and transfers in an attempt to strangle crypto itself I dont think they would have a defensible position dictating how people can use their own funds. That would just empower crypto more.
Has any of the banks published their updated policies informing about closing accounts for crypto purchases?
Banks and governments will put a spin on things to suggest they are the "good guys" protecting the people. They don't want a direct confrontation. What they are suggesting "seems " plausible. I mean if customers get in debt they can't pay back their loans , then everyone loses.
Except this is all pretty new. I don't think many folks have been in the space long enough for them to lose much from credit card purchases. We have been in an amazing bull market (until a few weeks ago) where it could be argued that using a credit card to buy crypto was a bold and brilliant move. Not to mention the fact that Coinbase will not let new customers buy much crypto with a credit card. So what they are pretending to do is be proactive. Frankly I would be willing to bet that more people have paid off their credit cards investing in Bitcoin than have dug themselves into holes. Of course in all fairness that could easily change, I am just saying I sincerely doubt they are reacting to a know problem.
I have also heard that some banks are going to treat crypto purchase like cash advances with those ridiculous fees and high interest rates. But doing that makes it seem like the banks are recognizing crypto to be "equivalent to cash", which is a comparison that do not want to make. Besides if you are expecting (rightly or wrongly) to make 500% to 1000% annual returns on alt coins , the 25 to 30% APR almost seems like a bargain.
I have not heard anything more on banks closing accounts for buying crypto, probably because that is too transparent in terms of their motives.
I don't believe that banks are banning credit cards for crypto as a protection for consumers, but more so a protection for the banks. If they have a large amount of customers purchasing crypto on credit cards, and crypto tanks, the banks will have to deal with potentially a large number of defaults.
I did see that the big banks are now treating it as a cash advance and charging those interest and fees.
I was not suggesting they were doing it to protect their customers, I was suggesting they will spin it that way.
If the banks were looking at this from a short term perspective, the thing to do would be simply make the change from a purchase to an advance. They get the fee and a sinful amount of interest. This could be a huge money maker for them. The FOMO would cause many consumers to overlook the usury and charge charge charge! Most consumers would have enough income or do well enough in crypto to pay the cards. Individuals who get over their heads could be dealt with on a case by case basis.
I simply believe the primary reason the banks are taking this action is they want to do everything they can to kill crypto. Blockchain in the hands of the banks is another thing, but Bitcoin and it's ilk are clearly their competition. The goal is to kill cryptos without giving them any credibility.
If the headline in the Wall Street Journal tomorrow is. "BIG BANKS ARE TERRIFIED OF BITCOIN PUTTING THEM OUT OF BUSINESS" I think that would be a huge "buy signal".
I was agreeing with you in that the banks motives were not first to protect customers is what I meant.
What is also interesting is that many crypto lovers are currently " all in". Even if they normally would think that buying crypto with a credit card was reckless, they might now look at these "bargain prices" as worth the risk.
The problem is that bottom may be a lot lower than most of us think. It actually could create a big problem if folks took their credit cards to the limits at 8K just to watch it fall to 4k. Especially if it does not bounce back for a few months.
I think there is going to be a lot of FUD (some of it real) in the next few months, much of it generate by or for the banks. If you already have the negative news stories on the cutting board and are just waiting to publish them, you would be a fool to lend money to the same people you are trying to break. You either fuel the market by giving it liquidity or you create a large number of customers who at worst will not be able to pay you back and at best will simply stop using the cards cause they can't afford to borrow any more.
What a coincidence, they more or less independently decided to do this at the same time. :)