UK Regulator Proposes Banning Crypto Customers From Using Credit Cards To Buy Bitcoin ⋆ ZyCrypto

The UK’s top financial regulator has proposed banning retail investors from purchasing cryptocurrency with any sort of borrowed funds, including credit cards, due to increasing concerns about consumer debt and financial harm. Britain Regulators Move To Restrict Borrowing For Bitcoin Investments A new discussion paper released on Friday by the UK’s Financial Conduct Authority (FCA) floated a proposal to ban cryptocurrency firms from allowing British customers to purchase crypto assets such as Bitcoin with a credit card. The proposed rule, which warns that crypto assets pose a high-risk and speculative threat to customers, would also outlaw the acquisition of crypto with any other form of credit, including loans and digital currency credit lines. “We are concerned that consumers buying crypto assets with credit may take on unsustainable debt, particularly if the value of their crypto asset drops and they were relying on its value to repay,” the FCA postulated. The FCA also noted that many UK crypto investors mistakenly assume they are protected by mechanisms such as the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service (FOS). In reality, most crypto investments do not carry such protections, and losses are not recoverable in the event of fraud, theft, or bankruptcy. A YouGov survey recently authorized by the FCA found that 14% of UK crypto users reported using credit to buy digital assets in August 2024. That figure represented an over 130% uptick from the previous two years. The proposed rule, if passed, would not affect all crypto assets, nonetheless. The FCA would still allow consumers to buy stablecoins with credit cards. FCA’s Forthcoming Rules Meanwhile, FCA’s executive director of payments and digital finance, David Geale, said in an interview with the Financial Times that crypto “is an area of potential growth for the UK, but it has to be done right.” “To do that, we have to provide an appropriate level of protection,” Geale added. The FCA seeks to regulate the domestic crypto market, ruling over exchanges, intermediaries, crypto lenders and borrowers, and decentralized finance platforms. The regulator is reportedly preparing to enact more stringent rules for crypto services aimed at retail investors than those offered solely to professional investors. According to Geale, the agency wants to formulate a regime that is both “safe and competitive.” He expects the regulator to create a regulatory framework that would lure businesses: “If we can get the regulatory regime right, it actually becomes attractive for firms. That is what we are trying to achieve.” He rebuffed claims that the FCA is antagonistic to the crypto sector. Instead, he explained that he believes the booming industry is offering high-risk investments with less consumer protection. “We are open for business,” the executive asserted. Source: https://zycrypto.com/uk-regulator-proposes-banning-crypto-customers-from-using-credit-cards-to-buy-bitcoin/