Us banks closing customer accounts using bitcoin and other cryptocurrencies
The company says that its approach to cryptocurrency transactions has not changed. Incidents like this pose several challenges for the cryptocurrency industry short-term, but also show just how scared the incumbents really are.
Currently, if you want to buy bitcoin, ethereum or any other alt-coin instantly, the only option is to use your debit or credit card. Transferring funds from your bank has lower fees, but takes several days. Coinbase has long accepted debit and credit cards for instant buys, however, passing on to the buyer the standard 4 percent credit card transaction fee. Now, it seems VISA issuers and Mastercard have quietly reclassified the way Coinbase credit card purchases are processed on their networks.
Even worse is that cash advances do not fall under the standard interest-free grace period that consumers expect for other credit card purchases. The moment the Coinbase purchase goes through, the transaction accrues and compounds daily.
For most people, losing 10 percent of your investment in fees means that the practice of using a credit card to buy cryptocurrency is effectively over. It will become more difficult for investors to purchase bitcoin and other cryptocurrency on their terms.
Transferring funds via ACH takes three to five business days. In a world where cryptocurrency prices can swing wildly in either direction, a week feels like a nail-biting eternity. This provides a consistent view of such purchases for both merchants and issuers. If anything, this change us banks closing customer accounts using bitcoin and other cryptocurrencies things more complicated in the short term.
By reclassifying Coinbase and presumably all other exchanges, as wellVISA and Mastercard are doing their us banks closing customer accounts using bitcoin and other cryptocurrencies to make it harder, slower and more expensive for people to invest in cryptocurrency.
The rise of bitcoin and future cryptocurrency is tied to the eventual fall of financial middlemen like VISA and Mastercard. Maybe they just woke up to it. Acquirers and merchants are responsible for ensuring that all Visa transactions are properly coded in the Visa payment system, so that issuers can rely on accurate and consistent coding when making authorization decisions.
These codes have been in place for some time. Justin Mauldin is the founder of Salient PR and an investor in cryptocurrency. More posts us banks closing customer accounts using bitcoin and other cryptocurrencies this contributor The Bank Of Facebook.