The third largest bank measured by assets in the United States, Wells Fargo, has made an announcement that customers will no longer be able to purchase cryptocurrencies using credit cards issued by the bank.
A spokesperson for the bank recently said:
“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency. We’re doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment. This decision is in line with the overall industry.”
The decision by Wells Fargo comes at absolutely no surprise. It follows along a playing field laid out by their peers — like dominos falling one by one.
In January, J.P. Morgan Chase confirmed to CNBC that customers would be able to continue using their credit cards to purchase cryptocurrencies. They promptly reneged weeks later when a spokesperson for the bank said:
“At this time, we are not processing cryptocurrency purchases using credit cards, due to the volatility and risk involved. We will review the issue as the market evolves.”
In other words, they were basically saying: we’re not going to face consumer default on debt due to poor consumer gambling choices.
Citigroup, among those banning purchases, said to ‘stay tuned’ as they ‘review their policy in accordance with market trends.’
Bank of America is also a part of the crypto-chicken club.
Given that all these other banks promised to ‘review their policies,’ Wells Fargo’s promise to continue to evaluate the issue as the market evolves is likely a nice way of saying that they’re going to wait it out and let someone else figure it out. This is a common thread among banks. For many, their sole purpose is to make money by lending money with the least risk of default possible.
HOW DO NORMAL PEOPLE BUY BITCOIN?
So how do normal people buy Bitcoin? Well for one, you could use cash and be subjected to atrocious fees using Bitcoin ATMs, or use a sketchier credit card for the purchase of the volatile investment.
Whatever the case may be, it’s truly a buyer beware landscape out there. With the frequent peaks and valleys of cryptocurrency valuations and prices, the only effective strategy, unless you’re a high-frequency trader, is simply to buy as low as possible and sit on your pile of digital gold for a decade. This is not exactly a convenient proponent to the ‘get-rich-quick’ mindset of U.S. millennials.
Given that Visa and Mastercard are treating the purchase of cryptocurrencies as “cash advances” in order to charge an extra 5%, who would even be willing to take that kind of risk unless they were fully confident in massive returns from their purchase?
The future looks the same for everyone. That is, whether you HODL BTC or are of the lucky few to pull liquidity out of a semi-legit ICO.
We need banks to support crypto. Until that happens, crypto-friendly consumers are going to get take advantage of with outrageous economic burdens.