When Bitcoin and other digital currencies were first introduced, banks were indifferent to their existence. They allowed their debit and credit cards to be used in crypto transactions.
That has now changed; many cryptocurrency traders from around the world are finding it hard to buy Bitcoin or altcoins using their credit or debit cards.
U.S. Banks Ban Cryptocurrency
In the U.S., several banks have banned their users from using their credit cards to buy cryptocurrencies. The Bank of America, JP Morgan, Citigroup, Discover, and Capital One are freezing the accounts of users who try to use their credit cards to buy cryptocurrencies.
Moreover, in January 2019, Visa severed its links with Wave Crest after Visa claimed that Wave Crest was not following its rules. That gave many cyrpto users the impression that maybe digital currencies may not always be transferable to fiat.
U.K. Banks Ban Cryptocurrency
In the U.K., Lloyds banking group was the first to announce it was banning users from buying crypto with their credit cards.
Shortly afterwards, the Bank of Scotland, Halifax, and MBNA also banned their customers from buying cryptocurrencies. Most banks are pointing out money laundering and high volatility, as among the top reasons for banning trades related to crypto.
Banks Ban Cryptocurrency Trades in Asia
In Asia, the Hong Kong and Shanghai Banking Corporation (HSBC), is also blocking users from carrying out any transaction related to Bitcoin or altcoins.
Moreover, in India, the Housing Development Finance Corporation Ltd (HDFC), sent their customers several threatening emails. The emails warned them against using their cards to buy cryptocurrency.
The emails threatened that customers who did not reveal the nature of their transactions will have their accounts closed. Moreover, the emails said that they will terminate any account used to fund trades related to cryptocurrency.
The Rise of peer-to-peer Trading Platforms
However, it is not all gloom for cryptocurrency traders. Platforms that offer peer-to-peer cryptocurrency trading services have experienced a surge in their volume of trade.
In early March, localbitcoins.com recorded a trade volume of just over $1 million. The following month, it experienced a trade surge that pushed their trade volume to $7 million over the same period.
While the banking industry is reacting to the crypto industry with bans and threats, that could be a blessing in disguise. After all, it is in the spirit of cryptocurrency to embrace decentralization and encourage peer-to-peer transactions.