In a move aimed at curbing the escalating threats of crypto-related scams and fraud, JPMorgan’s UK subsidiary, Chase UK, has announced a ban on cryptocurrency purchases starting from 16 October. This proactive step represents a significant escalation in the efforts of British banks to protect their customers from falling victim to cryptocurrency-related schemes.
Restrictions on crypto purchases
While it is not uncommon for banks such as HSBC and NatWest to impose restrictions on their customers’ cryptocurrency purchases, outright bans on these type of transactions remain relatively rare. Chase UK’s decision to bar customers from buying cryptocurrencies has been brought about by alarming statistics that highlight the increasing rate of crypto scams and fraud in the UK. These fraudulent activities range from deceptive investment opportunities to false celebrity endorsements.
Losses stemming from cryptocurrency-related fraud soared by over 40 percent in the year leading up to March 2023, surpassing a staggering £300 million for the first time. Even more concerning is the estimate that as much as 25 percent of transactions originating from their customers’ accounts and directed towards cryptocurrency firms were tied to fraudulent activities.
Protecting customers’ interests
Chase UK’s decision to implement this ban on cryptocurrency purchases is a proactive response to the mounting threats faced by UK consumers. The bank issued a statement, saying, “We’ve seen an increase in the number of crypto scams targeting UK consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account.”
This move by Chase UK is specific to their operation and not part of a broader, group-wide policy. However, it does align with JPMorgan’s stance on cryptocurrencies. In 2018, JPMorgan announced a ban on customers using credit cards to purchase cryptocurrencies. The bank’s CEO, Jamie Dimon, (in photo above), has long been a vocal critic of cryptocurrencies, having famously referred to bitcoin as a “hyped-up fraud” in the past.
Other banks may follow
Chase UK, despite being a part of the JPMorgan network, represents only a fraction of the UK’s retail banking market. Nevertheless, it’s worth noting that other banks are also taking steps to safeguard their customers against cryptocurrency-related risks. In March, NatWest introduced transaction limits for exchanges to protect consumers from potential substantial losses. A month prior, HSBC declared that customers would no longer be able to use credit cards for cryptocurrency purchases.
Challenger banks have also joined this initiative. TSB, a major high street challenger, initiated a crypto ban in 2021, citing the elevated fraud rates associated with digital assets. Digital bank Starling went a step further by prohibiting the buying and selling of cryptocurrencies since November the previous year.
Bitcoin and Ether are unregulated
Regulation for cryptocurrencies in the UK is evolving. While digital assets like bitcoin and ether remain largely unregulated, authorities are actively evaluating how best to oversee this rapidly growing asset class. In an attempt to combat misrepresentation and fraud, cryptocurrency firms operating in the UK will soon be subject to new rules imposed by the Financial Conduct Authority, set to take effect from 8October. These regulations include a ban on promotional tactics like “refer a friend” promotions to enhance consumer protection.
As Chase UK takes a resolute stance against cryptocurrency purchases, the broader financial services industry faces a growing imperative to address the risks associated with digital assets and ensure that customers are shielded from the ever-increasing threat of cryptocurrency-related scams and fraud.