Visa says you can buy almost anything, except for cryptocurrencies

The news this week is that several banks in the US and UK have banned the use of credit cards to buy cryptocurrencies (CC’s). The stated reasons – like trying to curb money laundering and gambling – and protect the retail investor from excessive risk – are impossible to believe. Interestingly, banks will allow the purchase of debit cards, making it clear that the only risks being protected are their own.

With a credit card, you can gamble in the casino, buy weapons, drugs, alcohol, porn, everything and anything you want, but some banks and credit card companies want to stop you from using their facilities to buy cryptocurrency? There must be some reasonable reasons, not the reasons mentioned.

The only thing banks fear is how difficult it can be to confiscate CC holdings when a credit card holder defaults. It will be much more difficult than repossessing a home or a car. The private keys of an encrypted wallet can be placed on a memory stick or piece of paper and easily removed from the country, with little or no trace of where they are. There can be high value in some cryptocurrency wallets, and credit card debt may never be repaid, leading to bankruptcy and a significant loss to the bank. The wallet still contains the cryptocurrency, and the owner can later access the private keys and use a local CC Exchange in a foreign country to transfer and pocket the money. A really terrible scenario.

We certainly are not advocating this kind of illegal behavior, but banks are aware of the possibility and some want to shut them down. This can’t happen with debit cards because banks aren’t at all out of pocket – the money goes out of your account instantly, and only if there’s enough of your money to get you started. We struggle to find any truth in the bank’s story about limiting gambling and risk. Interestingly, Canadian banks are not jumping in this bandwagon, perhaps realizing that the stated reasons for doing so are bogus. The fallout from these actions is that investors and consumers now realize that credit card companies and banks already have the power to restrict what you can buy with their credit cards. This is not how they advertise their cards, and it will likely come as a surprise to most users, who are used to deciding for themselves what they will buy, especially from CC Exchanges and all other merchants who have entered into trade agreements with these banks. Stocks have done nothing wrong – and neither have you – but fear and greed in the banking industry cause strange things to happen. This also demonstrates the degree to which the banking industry feels threatened by cryptocurrencies.

At this point, there is little cooperation, trust, or understanding between the world of paper money and the world of CC. The CC world does not have a central governing body as regulations can be enforced in all areas and this leaves every country around the world trying to figure out what to do. China decided to ban CC, Singapore and Japan are embracing them, and many other countries are still confused. The common denominator between them is that they want to collect taxes on CC investment earnings. This is not much different from the early days of digital music, as the Internet facilitated the unrestricted spread and distribution of unlicensed music. Digital music licensing plans were eventually developed and accepted, as listeners were okay with paying little money for their music, rather than endless piracy, and the music industry (artists, producers, and record companies) was doing well with reasonable licensing fees rather than nothing. Can there be a compromise in the future of fiat and digital currencies? As people all over the world are fed up with outrageous bank profits and banking expansion in their lives, there is hope that consumers will be viewed with respect and not be forever exposed to high costs and unjustified restrictions.

Crypto Currencies and Blockchain technology are increasing pressure around the world for a reasonable compromise – that’s a game-changer.

Stay tuned!