On June 11 Wells Fargo became the latest major U.S. bank—with JPMorgan Chase, Bank of America, and Citigroup—to put in place a prohibition against using its credit cards to purchase cryptocurrency. Despite Wells Fargo’s attempt at a low-key implementation, the ban was quickly picked up by a raft of news organizations. A spokesperson for Wells Fargo issued the following statement:
“Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency. We’re doing this in order to be consistent across the Wells Fargo enterprise due to the multiple risks associated with this volatile investment. This decision is in line with the overall industry.”
The prohibitions by these major banks is part of wider and ongoing trend of de-risking with respect to cryptocurrency. Indeed, many banks refuse outright to transact with certain companies dealing with virtual currency exchanges. For the most part, the issue is not whether cryptocurrency is volatile or risky, but rather a lack of understanding on how to deal with this new asset class. Regulators have explicitly stated that they are open to working with companies to offer services and products encompassing cryptocurrencies. But, many companies remain risk adverse, which leads to de-risking and stifling conditions for the players in the cryptocurrency world.