Wells Fargo, a banking giant which is the third-largest US bank with almost $2 trillion in total assets as of the end of the year has recently become the latest financial institution to stop its customers from buying cryptocurrency with their credit cards.
It is reported that Wells Fargo will soon ban transactions made at known cryptocurrency exchanges and brokerage platforms with bank-issued credit cards.
“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency,” a bank spokesperson said in a statement on Monday. “We’re doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment. This decision is in line with the overall industry.”
“We will continue to evaluate the issue as the market evolves,” the spokesperson added.
Wells Fargo has joined a list of credit card issuers to ban their customers from making cryptocurrency purchases with their cards. JPMorgan, Bank of America, and Citigroup had earlier implemented similar policies, indicating that customers at the four major US banks will have to try elsewhere if they wish to buy cryptocurrency on credit.
In addition, credit card processors such as Visa and MasterCard have started to charge cash equivalence fees on cryptocurrency purchases, weighing customers with additional fees for these transactions.
These bans have come as the cryptocurrency market goes through a bear cycle, as banks claim that they are concerned that customers buying coins on credit will default on their payments.
Back in January, a research done by student loan marketplace LendEDU discovered that an estimated 18 percent of investors had used credit cards to buy crypto and that one-fifth of those investors were holding the balances instead of paying them off immediately.
As a matter of fact, this is not the first instance for Wells Fargo to take such a rigid decision against the cryptocurrency sector. In 2017, the institution stopped banking services to exchange Bitfinex cryptocurrency, which is claimed to have subsequently used a host of third-party accounts to manage access to financial services before finally finding a banking partner on Puerto Rico.