As of June 27 Barclays has put in place a full ban for its credit card customers to purchase crypto. In the UK the bank has announced to completely stop cryptocurrency transactions via its credit cards.
This is a large shift which sees traditional banks pull away from retail clients’ access to digital assets. Barings reported customer protection as the key issue in this decision.
The bank brought up crypto’s volatility and the issue of low consumer protection. Also unlike traditional bank savings which are protected by the UK’s Financial Ombudsman Service and Compensation Scheme, crypto is not.
Aligns with FCA’s Goals
Barclays’ credit card decision comes after the FCA put out a discussion paper in May. This aligns with broader efforts by regulators, including those detailed in recent BBC coverage of crypto credit card restrictions.
The regulator is looking at which rules to put in place for these types of transactions. As for stablecoins which may fall out of that scope, other digital assets are under the regulator’s crosshair.
Barclays is out in front with this move which is in response to be more stringent regulations. It also puts the bank at the head of the pack in risk management.
Barclays Credit Card Members React to Mixed Signals
Critics say the ban is out of line. Also only a few months past Barclays put in over $130 million into BlackRock’s Bitcoin ETF. The Barclays card ban does not affect retail users but the bank is increasing its institutional crypto play.
That issue has raised criticism. Consumer groups report that the ban prevents access which in turn profits other institutions. Industry group The Payments Association reports that many already have issues. For some Barclays credit card was a last resort.
Some users turned to Barclays when other cards failed, despite risks well documented in Bankrate’s guide to buying crypto with a credit card.
Barclays follows The larger UK bank trend.
Others in the UK like Lloyds, NatWest, and HSBC have put in place crypto rules. Barclays has joined them which in turn is to report a smaller field of investors that may use credit.
Meanwhile, in the banking sector Monzo and Revolut are crypto friendly players. The field where large players like Barclays don’t play is for challenger banks which in turn are very much into getting those customers.
In March Barclays also severed its relationship with Coinbase and left the Faster Payments network. This is a sign of a longer term withdrawal from retail crypto.
