U.S. banks are intensifying their resistance to Bitcoin. Bank of America, the country’s second-largest bank, has become the latest major financial institution to ban credit card purchases of cryptocurrency, effective February 2, 2018. The move aligns with earlier decisions by JP Morgan Chase and Citigroup, both of which announced similar restrictions on the same day. Meanwhile, Visa and Mastercard have reclassified cryptocurrency purchases from exchanges like Coinbase as “cash advances,” imposing an additional 5% fee. This development is expected to significantly deter retail investors from using credit cards to buy digital assets.
Why Banks Are Turning Against Crypto
Despite Bitcoin’s growing mainstream recognition over the past year, traditional finance is pushing back. The conservative nature of legacy institutions has led to a climate of mistrust and self-preservation. Bank of America’s decision—while affecting only credit cards, not debit cards—stems from concerns over customers borrowing recklessly to buy Bitcoin, then defaulting when prices drop. The crackdown follows a Europe-wide restriction on crypto debit cards orchestrated by a Visa subsidiary, coinciding with heightened global regulatory pressure on cryptocurrencies.
Visa and Mastercard: Higher Costs for Crypto Purchases
Visa and Mastercard have not banned cryptocurrency transactions outright but have made them more expensive by reclassifying them as cash advances. This change means a typical $5,000 Bitcoin purchase on Coinbase would incur roughly $250 in fees. For most investors, such costs make credit card crypto purchases impractical. Debit card users remain unaffected, but the shift signals a clear deterrent for leveraged crypto buying.
Diverging Fortunes for Exchanges: Bittrex Gains Banking, Cryptopia Loses It
On the exchange front, Bittrex CEO Bill Shihara announced in a podcast that the U.S.-based platform would soon enable U.S. dollar deposits. The move is widely seen as an attempt to reduce reliance on Tether, which faces a subpoena from U.S. regulators. Bittrex joins Kraken in seeking direct fiat on-ramps, reflecting a broader push to distance from controversial stablecoins.
In contrast, New Zealand’s Cryptopia exchange revealed that its domestic bank would close its NZDT account on February 9, 2018, with little notice. Cryptopia criticized the bank for refusing to accept compliance documentation and highlighted the risks of operating without transparency—a veiled reference to Bitfinex’s opaque banking practices. The incident underscores the persistent difficulty exchanges face in securing reliable banking relationships.
Overall, the ability to move money in and out of cryptocurrency exchanges remains as challenging as ever. Banks that barely understood Bitcoin in 2013 now know it well—but the vast majority want nothing to do with it.