These Payment Methods Can’t Be Used for Crypto: What’s Restricted and Why
KEY TAKEAWAYS
- Institutions like Nationwide and HSBC prohibit credit cards for crypto purchases to prevent borrowing for volatile investments, reducing the risk of debt accumulation amid market fluctuations.
- Debit cards and bank transfers are subject to daily limits, such as Nationwide’s £5,000 cap, to curb large exposures and mitigate scam risks.
- Specific accounts like Nationwide’s FlexOne are entirely barred from crypto transactions to secureguard younger or vulnerable users, except for non-speculative in-game currencies.
- Institutional directives, such as the CBN’s order to close crypto-related accounts, prohibit banks from facilitating payments to preserve financial stability and combat illicit activities.
- Restrictions are driven by fraud prevention, regulatory uncertainty, and volatility concerns, as viewn in bans on platforms like Binance.
As the world of cryptocurrencies grows, rules and institutions have made it harder to use some payment methods, reducing the dangers they pose. Banks and central authorities have imposed curbs or outright bans on crypto transactions due to concerns about fraud, volatility, and other illegal activity.
This article looks at , the reasons behind these rules, and their effects on the crypto ecosystem as a whole. It uses examples from major banks, including Nationwide in the UK and the Central Bank of Nigeria (CBN).
As more people use cryptocurrencies, it’s significant for those trying to figure out how to use digital assets and traditional banking to understand these limits. Studies show that these policies are intended to protect customers while keeping the financial system stable. This shows a careful approach in a time of changing rules.
Learning About Payment Limits in Crypto
in cryptocurrency are rules set by banks, financial institutions, and authorities that restrict or prohibit the use of certain methods to purchase or trade digital assets. These generally go for ways that are simple to trick or could put users at great risk because of crypto’s volatility.
For example, credit cards are often outlawed because they allow people to borrow money for risky ventures, which could lead to debt too large to handle. To limit large-scale exposures, debit cards and bank transfers may have daily limits.
These kinds of rules aren’t the identical everywhere; they depend on the jurisdiction and the organization, and they typically fit into larger frameworks for and terrorist financing (CTF).
The Financial Conduct Authority (FCA) and other regulatory bodies have told UK banks to put in place protections that clahead show the risks of crypto. In Nigeria, the central bank has also previously told financial institutions not to allow crypto-related payments, again to keep the system stable.
These steps show that there is research-backed consensus that crypto can introduce new ideas, but that allowing people to use it through regular payment methods can make difficultys like scams and market manipulation worse. Analysts say that limits assist keep fragile consumers secure, especially in unstable markets where losses can happen rapidly and cannot be undone.
Specific Payment Methods Restricted for Crypto Transactions
Many institutions limit the payment methods available for purchaseing cryptocurrencies to reduce their risk. People can’t use credit cards very often because they borrow money.
For instance, Nationwide won’t let you pay for crypto with a credit card, even if you’re the main cardholder or an additional cardholder. This is in line with HSBC’s rules, which say that you can’t use credit cards to purchase from platforms.
In certain circumstances, debit cards have daily limits instead of outright bans. Nationwide has a £ 5,000-per-day limit on debit card payments (including digital wallets like or Google Wallet) from adult or student current accounts to crypto platforms. Transactions over this amount are not allowed, and there are limits on how much each card can spend on a joint account.
There are additional limits on bank transfers, especially through programs like the UK’s quicker Payments Service. Nationwide limits these kinds of payments to £5,000 per day for purchaseing BTC.
This limit applies to all branches, apps, internet banking, and Open Banking. Some accounts are completely off-limits. You can’t purchase crypto using Nationwide’s FlexOne accounts, which are usually for younger people. The only exception is in-game tokens like Robux or V-Bucks.
The Central Bank of Nigeria (CBN) told all deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs) to freeze accounts that were used for cryptocurrency transactions.
This made it impossible for banks to process crypto payments or transfers. Some platforms, like Binance, have extra blocks. Nationwide won’t let Binance accept card payments anymore because of media coverage and confusion about the rules.
Why The Restrictions Are There
The main reasons for limiting payment options in crypto transactions are to protect consumers, prevent fraud, and maintain economic stability. Companies like Nationwide put a lot of emphasis on protecting their consumers from fraud.
A company spokeswoman said the decision was made to “assist protect its members from cryptocurrency scams.” The FCA points to dangers, including high volatility and a lack of regulatory oversight, which lead banks to minimize their investments.
According to the , there are several risks associated with purchaseing crypto. We put these limits in place to assist keep your money secure and protect you. Nationwide said the Binance-specific limitations are in place due to “similar action from other providers, media coverage, and regulatory uncertainty,” with customer securety as the top priority.
The CBN’s order in Nigeria cautions institutions that “dealing in cryptocurrencies or facilitating payments for cryptocurrency platforms is prohibited” due to risks such as money laundering, terrorism financing, and challenges to monetary policy. The CBN’s stance aligns with concerns worldwide, as violations lead to “severe regulatory sanctions.”
Analysts say these bans are necessary because crypto’s anonymity makes it easier for criminals to commit crimes, and its volatility makes the economy less stable. Broader research shows that these anxieties are growing because of high-profile crashes and scams, and banks are worried about being held responsible in markets that aren’t regulated.
Case Studies: Policies of Nationwide and CBN
The way does things shows that UK banks are being careful. This was put in place to curb the escalation of crypto fraud. It has daily limits and prohibitions on credit cards, and it is constantly monitored for changes. This is like what Santander and HSBC have done, where limits are meant to keep “your money secure.”
The instructed banks to stop doing business with crypto companies and to shut down all crypto-related accounts immediately. The directive says, “All DMBs, NBFIs, and OFIs must find people and/or businesses that are trading or running cryptocurrency platforms in their systems and make sure those accounts are closed right away.”
This practically made it illegal for Nigerians to utilize crypto for bank accounts and transfers, which shows how worried people are about unregulated assets. These stories show how limits can keep innovation and security in check, but others say they might sluggish adoption.
What This Means for Users and The Crypto Market
Users have to look for alternative payment methods, such as peer-to-peer platforms or foreign platforms, which could make transactions riskier. For markets, they make things less liquid and less institutional, but they make people trust regulated finance more. According to of increased BTC ATM fraud in other countries, these kinds of rules have led to fewer scams in the UK.
The restriction in Nigeria kept crypto firms from using banks, but it was eventually removed, showing how rules are changing. In general, these steps show how significant it is to have explicit, worldwide standards to ensure that crypto can be used securely alongside other financial systems.
What Will Happen to Crypto Payment Rules in the Future
As cryptocurrencies grow, rules may change to improve things. The UK’s quest for crypto-friendly policies and Nigeria’s repeal of its prohibition in 2023 point to a move toward supervised integration.
Better and real-time monitoring could loosen constraints, making access securer. Research shows that there is more focus on stopping fraud, which could lead to fewer bans while yet keeping protections in place.
FAQs
What payment methods are restricted for purchaseing crypto at Nationwide?
Credit cards are prohibited; debit cards and bank transfers are limited to £5,000 per day; and FlexOne accounts cannot be used for crypto purchases.
Why can’t credit cards be used for cryptocurrency?
They involve borrowed money, increasing debt risks in volatile markets, and banks like Nationwide have banned them to protect customers from potential losses.
What did the CBN direct banks to do regarding crypto accounts?
The CBN ordered banks to identify and close accounts involved in cryptocurrency transactions or platforms, and to prohibit the facilitation of such payments.
Are there penalties for violating CBN’s crypto directive?
Yes, breaches attract severe regulatory sanctions, as stated in the CBN’s circular to financial institutions.
Why are payments to Binance restricted by Nationwide?
Due to regulatory uncertainty, media coverage, and actions by other providers, the focus is on protecting customer money.
References
- Limits on crypto payments:
- Cryptocurrency Trading: CBN Orders Banks To Close:
