Lloyds Banking Group became the first lender in Britain to ban its customers from purchasing bitcoin as well as other types of cryptocurrencies with their credit cards.
The report was first made by a British daily that said Lloyds would tell its more than 9 million holders of credit cards that any attempt to purchase digital currencies would be blocked. According to the newspaper’s report, transactions using debit cards would not be blocked.
The move impacts customers of Bank of Scotland, Halifax, Lloyds Bank, and MBNA a credit card company, all of which fall under the umbrella of Lloyds. The banking group represents close to 25% of all UK-based credit cards.
A Lloyds spokesperson said that the decision taken to protect its customers from making losses that were not affordable on Bitcoin, said the report.
The ban is to be implemented through the use of blacklist of sellers of major cryptocurrency. With the use of the list, transactions attempting to purchase from companies on the list will be blocked.
The ban by Lloyds on cryptocurrency purchasing using credit cards is the first move of its type from a bank based in Britain and follows suit of three major lenders in the U.S that last week announced bans of a similar nature.
The ban by Lloyds on using credit cards it issues to purchase digital currencies has come amidst a period of much volatility across the market.
The price of Bitcoin has plunged over the past two months, dropping from its high of more than $20,000 to $7,700 last Friday, with volatile swings both up and down being a common feature with the digital currency.
On Friday, up to 15% of value of bitcoin was lost during just trading before noon, prior to managing to increase in the afternoon to end the trading day positive.
Banks have become concerned that the wild swings will leave customers of theirs exposed to huge losses, making it impossible to repay credit cards balances.
On Monday, bitcoin pulled back in early trading in London to below $8,000 or approximately 2.5% lower than Friday’s close.
It is not known if other banks in Britain or other parts of Europe will follow suit with banning the purchase of credit card holders from purchasing bitcoin, but the announcement by the bank is not positive for the cryptocurrency.