
JPMorgan, BofA Ban Cryptocurrency Transactions on Credit Cards - pera
https://www.bloomberg.com/news/articles/2018-02-02/bofa-to-decline-all-cryptocurrency-transactions-on-credit-cards
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chrisco255
This is highly amusing to me. IRS rules that crypto currencies are not, in
fact, currency, but commodities and treated like property for taxation
purposes. A couple of banks are now saying, "we won't let you purchase said
commodities with credit cards". It's an arbitrary restriction. It goes to show
you just how much control large centralized banks have over our purchasing
decisions...which, to me, just reinforces the need for decentralized financial
technology.

A lot of folks on here are proponents of net neutrality. I think banking
should be neutral, too.

~~~
EpiphanyMachine
They are not blocking purchasing of these from all accounts, just credit
accounts. You can still purchase via ACH and debit. What they are doing is not
allowing you to use their money to buy:

>The move doesn’t affect debit cards, according to Betty Riess, a spokeswoman
for the Charlotte, North Carolina-based lender.

>Allowing purchases of cryptocurrencies can create big headaches for card
lenders, which can be left on the hook if a borrower bets wrong and can’t
repay. There’s also the risk that thieves will abuse cards that were purloined
or based on stolen identities, turning them into crypto hoards. Banks also are
required by regulators to monitor customer transactions for signs of money
laundering -- which isn’t as easy once dollars are converted into digital
coins.

~~~
yorby
what other kind of property can't you buy with credit cards...

~~~
schrodinger
cash (fiat currency). cash advances are limited in amount, and treated
differently in terms of interest.

~~~
yorby
but cash is a currency... unlike bitcoin (according to the IRS)

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Klathmon
I don't blame them in the slightest for this. The "immutable" (for lack of a
better term) nature of many cryptocurrencies means that any purchases made on
credit can't be easily taken back.

And I'm pretty sure it's always been "technically not allowed" to buy another
currency with credit cards (or it's technically allowed, but treated as a
"cash advance")

~~~
dawhizkid
Is that true? If coinbase detects a chargeback due to fraud from a bitcoin
purchase in your account couldn’t they just freeze your account and prevent
any outbound transfer from happening?

~~~
pjc50
Chargebacks may arrive at the merchant up to about 3 months from the
transaction.

~~~
tzs
That's too low.

The baseline for most credit cards is 120 days for the cardholder to dispute a
charge in the US, or 180 days internationally. Some specific dispute
categories for some credit cards have a shorter limit, and some effectively
have longer limits because the starting point is some date after the
transaction.

On top of that, there may be consumer protection laws in some areas that
affect this. For example, in California it is one year for certain types of
dispute [1].

Note that the above is how long for the cardholder to dispute the charge. Add
to that however long it takes the card company to process things before the
merchant sees the chargeback.

I've seen one that arrived at the merchant over a year after the transaction,
although I think that is rare.

[1] [https://oag.ca.gov/consumers/general/credit-cards-dispute-
ch...](https://oag.ca.gov/consumers/general/credit-cards-dispute-charge)

------
swiley
Credit cards and crypto currency never really mixed well anyway. If you sell
crypto currency for a credit card payment you take a huge risk because the
buyer can reverse the transaction but you can't. This typically means that
(for credit card payments) the markup is unreasonably high or the seller is
running some kind of scam.

~~~
fludlight
"If it's too good to be true, the seller is probably using it to launder
stolen coins." This theory gets floated frequently in the various crypto
subreddits.

------
gervase
I'm not very familiar with restrictions on credit card purchases - are there
other high-risk purchases that are routinely blocked on credit cards?

I understand the stated reasoning, but if this is the first such restriction
(again, I don't know if it is), it's a pretty remarkable deviation relative to
most credit card policies, i.e. we will happily finance whatever ridiculous
decisions you choose to make. I wonder if they are seeing spiking default
rates?

~~~
saryant
Purchasing high volumes of gift cards or other cash equivalents will often get
you shut down. Do this too much with Chase and you'll end up blacklisted.

~~~
pvg
Really? They're sold in volume for people to use in rewards and promotions
programs, I'm assuming this doesn't involve showing up at the gift card mill
with a chest of doubloons. How does that work?

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croddin
Makes sense to me. You can't buy many cash equivalents with credit card and
can't usually get cash advances from a credit card, so this is just correctly
implementing that policy. Can you buy stock with a credit card?

~~~
aianus
I've never had a credit card that didn't let me take out cash (at 20% APR of
course).

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koolba
The news for me was that until now they _were_ allowing these transactions.

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nodesocket
Heads up. I recently added funds into Coinbase using their instant debit card
option via a Chase checking account debit card. Lord behold a few days later I
had a $5.00 cash advance fee in my checking account. I called Chase and they
reversed the fee, but they suggested that I contact Coinbase because indeed
they are not doing a debit card debit, but a cash advance. Moral of the story,
stay away from Coinbase if you can avoid them.

~~~
sangnoir
The payment provider Coinbase uses to transfer to/from US bank accounts
(Plaid) asks for your online banking credentials and scrapes your data
(income, historical balance data and more) for resale[1].

1\. see "Products" on [https://plaid.com](https://plaid.com)

------
iMuzz
Ah, this is too bad.

I successfully churned about 60K credit card points at the end of last year.
(Buy $X + fees and sell when it covered the fees/principal)

~~~
matt_wulfeck
Sounds like an enormous risk to take on for credit card points.

~~~
ceejayoz
Why?

Buy Bitcoin on credit. Sell immediately. Deposit to bank account. Pay credit
card bill. Repeat.

~~~
zhoujianfu
Because iMuzz said "sell when it covered the fees/principal". If you sold
immediately, you'd be down a little bit each time because of cash advance
fees/coinbase fees. So instead, s/he was just getting lucky buying bitcoin as
the price kept rising. That same plan would not have done well so far in
2018..

~~~
ceejayoz
Fees weren’t that high until recently. 10k miles for a few bucks is a deal
most frequent flyer optimizers would sell their grandma for.

------
pstrateman
This has pretty much always been the case.

The only difference here is that they're explicitly saying it's banned.

------
kjullien
JPMorgan timeline :

1\. "Bitcoin is used only for fraud and by criminals"

2\. JPMorgan proved to be money laundering.

3\. "Bitcoin is actually not all that bad... We are going to look into it."

4\. JPMorgan "bans" cryptocurrencies.

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wozer
Well, nobody should get into debt to buy crypto.

But I'm not sure what the motives are here. I'm pretty sure banks like it when
their customers get into debt?

~~~
maxerickson
A credit line is pretty much just a loan.

They price the credit line (set the interest rate) based on some level of
expected risk.

If they believe an activity will cost them more in bad loans (and whatever
else) than they will earn in interest, they will adjust the terms of the loan
to forbid that activity.

------
tptacek
Well. Surely, this is what cryptocurrencies are for: to route around the evil
monopoly banks. One assumes the way that cryptocurrency exchanges handle this
will reveal once and for all the true utility of cryptocurrency in the modern
economy.

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dogma1138
Don’t most large exchanges disallow credit cards anyhow?

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adamnemecek
How about go fuck yourself, this train isn't stopping. God, I hope they burn.

~~~
dang
I appreciate the many wonderful story submissions you've made to Hacker News
over the years, but if you continue to break the rules in comments here, we're
going to end up banning you. It wouldn't be fair to other users otherwise. So
could you please (re-)read
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)
and post civilly and substantively, or not at all, from now on? Just like
every HN user needs to.

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solotronics
the entire model of credit cards is so rife with fraud that they don't want to
handle cryto purchases. sad.

~~~
mulmen
This seems like more of a condemnation of cryptocurrency than credit cards.

~~~
solotronics
really? you can't rely on others good will, your money should be
cryptographically secure and require you to send it instead of anyone with a
number being able to pull your money. its like having an API with no login or
password on it.

I totally agree with your previous comments on the EFF and peoples right to
privacy and secure data. Shouldn't this extend to their money as well?

~~~
PeterisP
If you can't rely on others' goodwill, then for any purchases you need a solid
mechanism to ensure that you can reverse the transaction if you get cheated.
Credit cards provide such a system, pure cryptocurrencies ("code is law") do
not - for that you need at least a cryptocurrency plus a _trusted_ escrow
system, and even that doesn't give you equivalent protection since non-escrow
payments are still possible, allowing you to lose your money if hacked.

Credit cards isn't a system where "anyone with a number being able to pull
your money" \- merchants can _ask_ for that money, but they're not certain to
get it, you can veto that transaction, you'll get it reversed (with legal
guarantees) if its fraudulent, and you can get it reversed if you were sold
goods that aren't what you were promised. Not so with crypto, where once you
send it to someone for whatever technical reason (including a compromised
number) it's gone.

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fady
I think they know some will make 15-20% on their transaction thus being able
to pay off debt faster. If they ban crypto tranactions, they keep things as
is. Why do they care where you spend your money? If they allow one to buy some
collectables on ebay that will generate no value, then they should not care
about crypto, especially since long term investments see great returns.

Think about it. Wide adoption at the end of 2017, bit licenses, crypto-funds,
etc etc. Look at the data. It does not lie. It's a good investment and they
see some consumers using this as tool to reduce their debt faster.

Again, buying some plastic toys on ebay is ok, but crpyto is bad? It's bs.

They want $.

