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Comment by chrisco255 | Hacker News Reader

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.

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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.

Exactly! Brokerages and credit card issuers don't permit you buy equities with credit cards either.

Not being able to use credit to purchase crypto is a move that protects the banks and the end user... its pretty dangerous trading on barrowed money.

> You can still purchase via ACH and debit.

This isn't strictly true. These same banks have been known to close accounts that are associated with known crypto exchange transactions (coinbase, bitstamp, etc.) - to the point of most recommending you keep these transactions entirely separate and try to avoid them if possible.

I was originally interested in Bitcoin exactly due to this. Money in the bank is not your money, and that was made exceedingly clear to me on a few occasions. That they are corner cases and outliers is irrelevant to me - that's where the system breaks down and you find out exactly how powerless you really are until you're into 8 figure territory.

Basically do anything a bank determines is risky and you more or less forfeit your access to the US banking system.

Large banks actively choose winners and losers and who you can send your money to every single day. Try buying porn on-line with some credit cards for example.

I don't particularly think buying crypto with a credit card is a great idea, but it certainly highlights how much the war on cash and ever increasing centralized banking really has significantly reduced your personal freedom in just a couple decades.

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

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

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

Isn't buying crypto on a credit card basically leveraged speculative trading on an extremely volatile asset? Considering that many people who are buying crypto are doing it for investment purposes, it's pretty obvious why banks would frown on this. The downside risk is enormous, it distorts their credit models, and they have no way to contain damage by margin calling.

And yet post Glass-Steagell banks will happily borrow equities to short them, even with money provided by investors.

Investors loan them money with the knowledge that they do that, and banks have risk models in place to try to mitigate the risk associated with those trades.

Banks agreed to extend credit to Bob from accounting so that he could buy consumer goods, not so he could participate in leveraged trading. The average individual is utterly unprepared for that risk and doesn't understand it, and banks aren't prepare to accept that risk. If you force them to, they will be much more conservative in who they give credit to, and the average user will lose out as a result. It's far easier to ban stupidly risky behavior than build it into their credit models.

Also, if people want to do leveraged trading, there are mechanisms to do it outside of credit cards. The fact that people are using credit cards in itself suggests that they are unsophisticated and should not be doing such trades.

I agree I wonder how many people bought stuff a few weeks ago when there was an obvious massive bubble and tried to do charge backs or disputes when the price started falling and they releaized how much they lost?

Between that, payments to ransomware, whatever online drug markets exist, etc... can’t blame them at all.

Some people blow credit card limits on booze and clothes. Please tell me how that is somehow a more justified purchase than crypto.

If you buy booze and clothes you know you won‘t see your money again.

People buy consumer goods knowing that they're not going to get that money back. A lot of people buy crypto because they think it can only increase in value, and so they end up spending far more than they are willing to lose when the value goes down. It's not that one purchase is "better" than another, it's that people think about the purchases differently which leads to more risky behavior when it comes to buying crypto.

Credit card issuers refuse all sorts of transactions though.

They have legitimate reason to not take on the downside risk of crytocurrencies and their card agreements make it clear enough that they can't be used for everything.

You can't buy stocks or a house downpayment on a credit card, either. Is that an arbitrary restriction? No, there's good reasons behind it.

But you can buy a car that costs as much.

Some of these restrictions are clearly arbitrary.

With cars it's generally the dealers that object due to the fees.

I think a better analogy is prohibiting using your credit card as a de facto margin account for buying crypto currencies.

If they were letting people purchase bitcoin on credit cards up until last Friday[, there's going to be a ton of people that racked up charges at the $15-20K price level in December that cannot pay them back. Be curious how big the damage is going to be for them.

The same way those people would pay off their cards for any other purchase. BTC's downward price has no bearing. Most CC purchases are for things like food, furniture, jewelry, clothes, electronics, etc, all items that are sunk costs; the affordability of the CC bill is a product of credit score and overall credit limit.

People don't blow $20,000 on a flat-screen TV and a fancy dinner because they expect those items will earn them $30,000 next week.

If they are buying BTC on a credit card, they are doing it because they expect it will.

At the same time, we'd also be proponents of shutting down the connection of someone infected with a virus that is flooding the network with traffic. This would fall under the same thing, if the banks are running into a lot of problems with CC transactions to buy crypto.

Also, what the IRS says about cryptocurrency for tax purposes has no bearing on the discussion at hand.

Who knows? Maybe they were losing money to frauds / chargeback claims that haven't been plublicized.

When you use a credit card, you're not using your own money - you're borrowing the bank's money. It's perfectly legit for them to evaluate the risk associated with what you're using the borrowed money for.

Protecting people from themselves is a USA tradition. Ask the SEC. I assure you once bitcoin trading has the protections that SEC adds to stocks, JPMorgan & BofA will once again allow credit card purchases of them.

> Protecting people from themselves is a USA tradition.

Um.... they aren't protecting people from themselves. The bank is are protecting themselves from their customers -- both from fraud the bank becomes liable for and god knows what legal regulations.

BofA doesn't give a fuck about you, they are doing this to cover their own ass.

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