Australians Can Still Use Credit Cards on Foreign Exchanges Despite UK, US Bans
Earlier this week the Lloyds Banking Group in the U.K. and Bank of America, Citibank and JP Morgan in the U.S. announced they are banning crypto exchanges from their list of approved transactions — meaning no more buying digital assets with credit cards. However, it seems Australian traders on overseas exchanges remain safe from similar bans, at least for now.
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Banks Using Fraud as an Excuse to Ban Crypto Activity
The cryptocurrency space is mostly unregulated and filled with eager enthusiasts who have just begun learning about crypto, and are looking to make a quick profit — but aren’t yet savvy to be able to navigate the cryptoverse without running into serious issues. This combination provides a perfect storm for scammers.
Add that to credit card fraud in ever-increasing numbers, and you have a recipe for launching a seemingly innocent attack on crypto, under the guise of customer protection.
In Australia, crypto exchanges have never allowed users to connect credit cards to their (local) accounts. Instead, exchanges require customers to comply with KYC/AML rules and allow them to connect their bank accounts and transfer their own cash directly, usually with a low daily limit, and to make deposit using services like Poli and Blueshyft.
Many Australians have accounts with international exchanges and use their credit cards to purchase cryptocurrencies, but the Australian banking industry has not yet made any official announcements that they would be following the actions of their counterparts.
Credit Cards Not Suitable for Internet Use Anyway
Adam Poulton, president of the Blockchain Association of Australia, commented on the international bans:
“Well, it is obviously due to the high risk of fraud and chargebacks via the credit card system. The credit card system was designed decades ago and was never intended for use remotely via the internet.”
The U.S. Federal Trade Commission’s online database of consumer complaints has compiled 13 million card fraud and identity theft complaints from 2012 to 2016, with 3 million in 2016 alone. Of those, 42 percent were fraud related, and 13 percent were identity theft complaints, according to Creditcards.com.
“Direct deposits and cash deposits (as predominantly used in Australia) via agencies such as Poli and BlueShyft reduce the risk somewhat”, said Poulton, “however they don’t reduce the fraud and chargeback risk to zero and this shows up in the chronic problems Australian exchanges have with banks over time and the constant shifting of banking providers for all exchanges providing bitcoin/crypto conversions.”
Banks aren’t trying to save innocent people from making poor decisions — anyone can most certainly still use their credit card at any casino around the world, for example – so are they instead trying to get some leverage against the rise of crypto?
Why do you think banks are extra-strict when it comes to cryptocurrency transactions? Let’s hear your thoughts.
Images via Pixabay