Why Has Barclays Banned Credit Card Crypto Payments?

Barclays has introduces a ban on purchasing cryptocurrencies using its Barclaycard credit cards, a move it says is intended to reduce customer risk. 

The UK banking giant says it made the decision due to “certain risks with purchasing cryptocurrencies”.

Quiet update to policy

The policy change was published discreetly on the Barclaycard website, appearing in an FAQ section before the bank began enforcing it. 

On the website page, the bank explains that a sharp drop in crypto prices “could lead to customers finding themselves in debt they can’t afford to repay”.

Lack of safety nets cited

Barclays points to the limited protections available to crypto investors as a major factor behind the move. 

Unlike traditional financial products, crypto transactions are not safeguarded by the Financial Ombudsman Service or covered under the Financial Services Compensation Scheme.

While other UK banks, such as HSBC, implemented similar restrictions years ago, Barclays’ decision arrives relatively late – prompting speculation about what has triggered the bank to act now.

FCA stance

This announcement closely follows the UK Financial Conduct Authority (FCA)’s latest discussion paper, which explores how cryptoassets are used and whether further oversight is needed. 

The regulator acknowledges a rise in consumers using credit to fund crypto purchases, raising concerns about potential debt exposure.

David Geale, Executive Director of Payments and Digital Finance at the FCA, says:

“Crypto is a growing industry. Currently largely unregulated, we want to create a crypto regime that gives firms the clarity they need to safely innovate, while delivering appropriate levels of market integrity and consumer protection. 

“Our aim is to drive sustainable, long-term growth of crypto in the UK. We’re asking whether we have got the balance right.”

Catching up with competitors

Several other UK banks have already taken similar steps to Barclays in restricting the use of credit cards for purchasing cryptocurrencies. 

HSBC, for example, introduced its own ban in 2018, citing concerns about customer safety and the high-risk nature of digital assets. At the time, the bank told customers it would no longer support credit card payments to crypto exchanges due to regulatory uncertainty and the volatile nature of the market.

Similarly, NatWest has imposed limits on cryptocurrency transactions. While it has not enforced a complete ban across all services, it has capped the amount customers can send to crypto platforms in a single day or month. NatWest has said this is to “help protect customers from losing life-changing sums of money”.

Santander UK has also implemented restrictions, particularly on real-time payments to crypto exchanges. The bank has expressed concern about the high level of fraud associated with cryptoasset transactions.

Lloyds Banking Group, which includes Halifax and Bank of Scotland, reportedly blocked credit card crypto purchases in 2018 as well, following a sharp fall in Bitcoin’s price.

These measures collectively show a trend among UK financial institutions to limit exposure to crypto through credit, in an effort to reduce consumer risk in a largely unregulated space.

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