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JPMorgan and BofA halt Bitcoin purchases on credit cards

Bank of America (BofA) and JPMorgan have started to declined credit transactions with known exchanges. Thus, the banks have restricted crypto purchase using credit cards.

JPMorgan Chase and Bank of America have banned purchase of Bitcoins using credit cards due to risks associated with the cryptocurrency.

This came even as Bitcoin price hit the lowest of $8,000 in three months and a loss of more than half since December 18.

Bank of America (BofA) and JPMorgan

A previous research or study showed that selling cryptocurrencies on credit posed a risk. For instance, 3 to 4 percent who bought on credit did not pay back. 18 percent were buying on credit card according to the study. People were doing so out of fear of missing out from crypto dealings as prices rose to the roof.

Also, credit for crypto purchases add to the risk when prices are volatile and when they are expecting to go down.

Julian Hosp, the co-founder and president of TenX, mentioned credit purchases as one reason that could cause crypto to crash if projections turned as unexpected. For instance, there was a 20 to 25 percent for that to happen. This it causing a drop of 5 to 10 percent decrease in market volume according to him.

However, it is obvious that more lenders would want to lend when the prices are sky rocketing.

JPMorgan banned the purchases on Saturday according to a bank spokeswoman Mary Jane. Bank of America banned the trade on Friday. This will affect all personal and business credit cards from the bank according to a memo.

However, the bank’s debit cards are still allowed to trade crypto.

Other banks not supporting the transactions include Capital One Financial Corp. and Discover Financial Services. Citigroup is studying its policy.

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David

David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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