American banks crack down on credit card usage to buy Cryptocurrencies

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In yet another crackdown on the use of cryptocurrencies, America’s largest banks like JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc are quickly banning customers from using credit cards to buy cryptocurrencies, by declining such transactions.

JPMorgan has even cited the risk of non-repayment by borrowers as the reason behind declining transactions. Last year, the Initial Coin Offerings (ICOs) drew $3.7 billion and in many such cases companies struggled to make obligations or had revealed themselves as scams.

If ICOs are fraudulent, consumers can dispute the credit card charges. In fact, later in December, the regulators in the US had filed a suit against a man and his firm, claiming that they raised $15 million in a fraudulent ICO that accepted cards.

A major reason behind such an action is also the declining Bitcoin, due to which banks feel that consumers may have difficulty while repaying the amount.

However, on Monday, Bitcoin climbed its way back from the four-month low of $5,922, to $9,069. Alternate coins Ripple, Litecoin, and Ether also climbed about 3.5%.

The jumping up from cryptocurrencies is being seen positive in an otherwise down cryptocurrency market and is expected to turn the negative sentiment around.