Bitcoin and other digital currencies continue to attract our attention for many reasons. As bitcoin continues to fall in value after the dramatic increases last year, governments are looking at ways to regulate it, banking groups at limiting the ways you can buy it and police are warning that it is popular among criminals.
Bitcoin ended last week down 30% at $8,291.87 – its worst week since April 2013 and far below the $19,000 it reached last November. However, the crypto-currency is still ahead of the $1,000 it was trading at this time last year.
With police warning that digital currencies can be used by criminals to evade traditional money laundering checks and other regulations, Theresa May, The Prime Minster, said recently that action against digital currencies may be needed “precisely because of the way they are used, particularly by criminals”. She told Bloomberg: “In areas like crypto-currencies, like Bitcoin, we should be looking at these very seriously.”
The Treasury have stated its intentions to update regulation to bring virtual currency platforms into anti money laundering and counter terrorist regulation.
Alongside this Facebook have also announced that it would block any advertising that promotes crypto currency products and services and in China there have been indications that the government is looking to tighten legislation to prevent investors in the country from accessing overseas exchanges to trade in crypto-currencies.
A ban has also been announced on customers buying bitcoin and other crypto currency on their credit cards by Lloyds banking group. The ban, starting on Monday, applies to Lloyds Bank, Bank of Scotland, Halifax and MBNA customers. It will not apply to debit cards, only to the banking group’s eight million credit card customers.
Over the weekend, several of the biggest issuers of credit cards in the US also banned customers from using their cards to buy digital currency.
The list of financial firms included Bank of America, Citigroup, JP Morgan, Capital One and Discover.
The move to ban credit card purchases by Lloyds comes amidst concerns over the recent sharp fall in value of digital currencies and the worry is that people could run up debts and banks could end up footing the bill for unpaid debts should the price continue to fall.
Explaining the ban, a Lloyds spokeswoman said: “We continually review our products and procedures and this is part of that.”
Gillian Guy, the chief executive of Citizens Advice, welcomed the announcement by Lloyds, saying it “shows they recognise the risks of credit card customers running up debt they can’t afford,” she said.
UK Finance, the banking trade organisation said it had not released any guidance on this matter