Most vital U.S. credit label issuers have now criminialized a use of their cards to buy Bitcoin or other digital currencies, in a pierce dictated to diminution both financial and authorised risk.
Citigroup also says it is crude cryptocurrency purchases on credit, and Capital One and Discover had already enacted their possess bans. That means all of a top five credit label issuers have announced or implemented bans.
The moves are above all in a banks’ self-interest. As Fortune formerly reported, a insanity surrounding cryptocurrency late final year appears to have encouraged many sell investors to use credit cards as leveraging tools, shopping some-more cryptocurrency than they could afford. With Bitcoin down roughly 50% from Dec highs, many of those investors are expected underwater right now, and might not be means to compensate off their initial Bitcoin purchases soon, if ever.
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Further, as Bloomberg points out, banks might be obliged for monitoring customers’ function to forestall income laundering after they make a credit-backed Bitcoin purchase, a tough customary for them to approve with.
The bans — or some-more to a point, a news of a bans — might intensify ongoing declines in cryptocurrency prices. After a large rebound Saturday morning, crypto markets broadly retreated on Sunday. Bitcoin is now trade during around $8,500 from a Dec high nearby $20,000.
In a longer term, however, tighter cryptocurrency investment controls, either from regulators or lenders, seem expected to assistance lessen a consequences of both hype and scams. For most of 2017, those threatened to shroud a underlying guarantee of blockchain technology, that is still in a really early stages of evolution.