Wells Fargo Bans Cryptocurrency Purchases on Its Credit Cards
What's the Story?
- Wells Fargo is banning customers from using their credit card to buy cryptocurrencies
- Wells Fargo is worried about customers defaulting on these purchases
- LendEDU found a 22% default rate in cryptocurrency purchases funded via credit cards
Why Does This Matter?
I stress that this decision isn't related to cryptocurrency. I saw many people on Twitter complaining about how banks are leveraging their positions to block their competition. While cryptocurrencies might be competition, this isn't being done to slow the growth of cryptocurrencies. Banks are concerned about the credit risk of cryptocurrencies. And rightly so! When someone uses a credit card to purchase something, the credit card company is bearing the risk (in this case Wells-Fargo). Wells-Fargo has assumed that people who buy cryptocurrencies via credit cards have a high default risk. I understand that logic. People can't buy stocks via credit cards so why should people be allowed to purchase cryptocurrencies via a credit card?