Coinbase, one of the largest Bitcoin exchanges in the world, tweeted out last week that certain credit card issuers were blocking transactions on its exchange. These bank based cards included; JPM Chase, Bank of America, Citi and Capital One.
So what’s up with that?
Well, the volatile price of the cryptocurrencies is the issue. Credit Card transactions do not clear immediately and rapid changes in the price of BTC or ETH etc. create a challenge.
But the problem goes further. Banks are required to track transactions and be alert for potential money laundering scams. That can be tough when you are moving things around in Crypto. Bloomberg reported that Mastercard said cross-border transactions on its network have risen dramatically this year, indicative of clients using their credit cards to buy cryptocurrencies.
Additionally, cyber security risks are at a heightened level. Reports of exchanges being hacked have become commonplace. Credit card issuers are understandable sensitive to this fact
Customers using credit cards on Coinbase: the following card issuers are now blocking purchases of digital currency with credit cards.
Bank of America
We’re encouraging affected customers to switch to debit card or bank account payment methods.
— Coinbase (@coinbase) February 6, 2018
So what is the solution to this enigma?
Coinbase believes you should just use your debit card. Or perhaps you can fund your account in advance just like a traditional brokerage account? Is that too much of a stretch for investors?