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Bitcoin: Citi, Lloyds and other banks ban credit card purchases

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Some of the world’s biggest banks are acting to prevent their customers from using credit cards to buy bitcoin.

In the U.K., Lloyds Banking Group (LLDTF) said Monday that it will no longer accept transactions involving the purchase of cryptocurrencies on credit cards issued by Lloyds Bank, Bank of Scotland, Halifax and MBNA.

A person with the knowledge of the decision said the bank was trying to “protect its customers.”

The rapid rise and fall in the price of bitcoin, and other cryptocurrencies, has sparked fears that customers could get deep into debt if they used their credit cards to speculate on such volatile assets.

Bitcoin was worth nearly $20,000 in December, after gaining as much as 2,000% during 2017. So far this year it has crashed more than 40% and on Monday fell below $8,000 for the second time in a week.

Lloyds’ announcement follows similar moves by major American banks.

Citigroup (C) confirmed Monday it does not permit credit card purchases of cryptocurrency, adding it will “continue to review its policy as the market evolves.”

Related: What is bitcoin?

Bank of America (BAC) and JPMorgan (JPM) also reportedly announced last week that customers won’t be able to buy cryptocurrencies using their credit cards.

The bans come amid signs that regulators in several countries, including China and South Korea, are moving to tighten the rules on cryptocurrencies.

“We encourage innovation, but we want to make sure that all of our financial markets are safe and aren’t being used for illicit activities,” U.S. Treasury Sec. Steven Mnuchin said at the World Economic Forum in Davos last month.

Related: Why people are still talking about bitcoin and tax reform

Indian Finance Minister Arun Jaitley said Friday his country will “take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payment system.”

Lloyds Banking Group said customers would still be able to use their debit cards to buy cryptocurrencies.

First published February 5, 2018: 7:46 AM ET

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