Barclays, one of the largest banks in the U.K., announced it will stop allowing customers to use their credit cards to buy crypto starting Friday. The bank said this decision is due to risks linked to the volatile prices of crypto assets. Barclays explained that a sudden drop in crypto prices might leave some customers with debts they cannot repay.
The bank made this announcement on its website on Wednesday. It also pointed out that crypto purchases are not protected by financial safety nets like the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS). The FSCS usually reimburses up to £85,000 if a financial institution fails, but crypto buyers have no such protection.
This move follows similar steps taken by other banks like Nationwide and HSBC, which banned the buying of crypto with credit cards in March 2023. That happened after several crypto companies collapsed in 2022, causing concern over customer safety.
The decision comes at a time when the U.K. is debating whether credit card purchases of crypto should be limited. The Financial Conduct Authority (FCA) asked the public for opinions on whether such restrictions are necessary.
In response, the Payments Association, a London-based group, warned against banning credit card crypto buys. It said, “Concerns arise regarding the proposed ban on using credit cards to purchase crypto. This suggestion seems to equate crypto purchases with gambling.” The group argued consumers should be able to make informed choices within set credit limits.
Furthermore, buying crypto with a credit card can also be costly since some banks treat it like a cash advance, charging higher fees and interest rates.
Barclays’ decision shows ongoing concerns about crypto risks and customer protection in the fast-growing digital asset market.
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