Bitcoin latest: Lloyds credit card customers banned from buying cryptocurrencies

Banks fear that the plunging value of the currency will leave people in dangerous debt

Lloyds has banned customers from using its credit cards to buy bitcoin.

The banking group is afraid people will be left in dangerous debt by buying cryptocurrency using credit and then losing out if the value continues to fall.

Lloyds Banking Group is the first in the industry to ban people from using credit cards to buy cryptocurrencies. It covers all of the group’s different banks, including Halifax, Bank of Scotland and MBNA.

Bitcoin rose to huge and record new heights in December, amid a flurry of interest that led to claims that “bitcoin mania” had struck the world. But much of that gain has now been lost, and the value has more than halved.

The banking industry is worried that many people may use credit cards to buy bitcoin, but then see their holdings lose value amid the continuing slide in the price of cryptocurrency. As a result they could be left with large debts and little to show for it, analysts fear.

Significant numbers of people in Britain are thought to have bought bitcoin as it surged in value, peaking at nearly $20,000 (£14,465) in December.

As news of Lloyds’ ban emerged on Sunday the value was around $8,000 (around £5,700).

A spokeswoman for the banking group said: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”

The move follows warnings by regulators in the US, South Korea, China, Russia and India over the cryptocurrency.

Germany’s Bundesbank has also called for global regulation of bitcoin and France’s finance minister wants tougher rules for cryptocurrencies.

Meanwhile, Facebook banned adverts for bitcoin and other cryptocurrencies on its sites after recent criticism from users about scams and hoaxes being promoted in their newsfeed.

Critics say cryptocurrencies are used by criminals and rogue states to carry out clandestine transactions.

Earlier this month, US billionaire Warren Buffett ruled out a foray into cryptocurrencies, warning that the bitcoin boom will “come to a bad ending”.

The chairman and chief executive of Berkshire Hathaway has joined the chorus of voices criticising the digital currency.

His comments came just a day after JP Morgan chief executive Jamie Dimon said he regretted calling bitcoin a “fraud”.

Despite the slide, bitcoin’s current value is significantly higher than its $900 (£640) position recorded in January 2017.

Additional reporting by agencies

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