HSBC and Nationwide Building Society are the most recent major UK banks to prohibit the use of credit cards for purchasing crypto, according to Bloomberg.
The decision follows a notice by the Financial Conduct Authority (FCA) that highlights the potential risks of investing in cryptocurrency.
HSBC and Nationwide Comply With FCA Regulations
The report suggests that HSBC had imposed the ban last month, citing the financial risks associated with investing in digital currencies. On the other hand, Nationwide sent an email to its customers informing them of the new restrictions.
“We will not allow payments to crypto exchanges using a Nationwide credit card […] Neither you nor any additional card holder will be able to use a Nationwide credit card to purchase cryptocurrency.”
Risk vs Reward – Is Crypto Worth It?
Cryptocurrency prices can be highly unpredictable, and investors may experience significant losses if they are not adequately informed. Furthermore, the lack of regulation in the industry has made it a target for fraud and other criminal activities.
Cryptocurrencies have become notorious for their involvement in money laundering, drug trafficking, and financing terrorism.
HSBC. Image: PYMNTS
The security of crypto exchanges and wallets has been a major concern in recent years, as the industry is vulnerable to cyber-attacks and hackers. This could lead to a loss of funds.
Two of the biggest banks in the United Kingdom, HSBC and Nationwide, have recently imposed a ban on customers attempting to purchase cryptocurrencies with their credit cards. This follows a trend of other financial institutions in the country taking a similar stance.
The move is seen as a protection for customers, as cryptocurrencies are seen as a risky asset, due to their susceptibility to theft, hacking, or other forms of fraud. If wallets or exchanges become compromised, investors may lose their funds.
In addition, the adoption and usage of cryptocurrencies are still relatively limited, making speculation more important than actual use. Without widespread acceptance and legitimization of crypto payments, their values remain unpredictable and unstable.
The attitude of banks towards cryptocurrencies is mixed. Some view them as a threat to their business model, as they could potentially replace their services. Others are exploring opportunities to integrate cryptocurrencies into their business operations and offer related products and services to their customers.
It is evident that the views of banks on cryptocurrencies are evolving along with the technology and markets. While some remain cautious, others are looking for ways to capitalize on the potential of cryptocurrencies and blockchain technology. Despite HSBC’s ban, the financial institution is now part of the metaverse, having submitted trademark applications for a range of digital currency, metaverse goods, and other products.
-Featured Image from The Sportster
