(qlmbusinessnews.com Thurs, 28th Sept, 2023) London, UK —
Chase UK to Prohibit Cryptocurrency Purchases Amid Fraud Concerns.
Chase UK, a subsidiary of JPMorgan, has taken a decisive step to curtail cryptocurrency purchases starting next month, aiming to combat the growing trend of criminals exploiting digital assets for fraudulent activities. This move comes as British banks are increasingly concerned about their networks being leveraged for scams and frauds associated with cryptocurrencies.
While some banks, such as HSBC and NatWest, have previously imposed restrictions on cryptocurrency purchases by their customers, outright bans on such transactions are relatively uncommon. Chase UK's decision, communicated to customers via email on Tuesday, reflects the severity of the issue.
The bank justified its action by citing data revealing a significant surge in cryptocurrency-related scams and frauds in the UK. These fraudulent activities encompass fake investment schemes and deceptive celebrity endorsements. According to data from the fraud reporting agency Action Fraud, losses due to cryptocurrency-related fraud increased by over 40 percent in the year leading up to March 2023, exceeding £300 million for the first time. It's estimated that between 20 and 25 percent of transactions from customers' accounts to cryptocurrency firms were linked to fraudulent activities.
In response, Chase UK announced that it would block customers from purchasing cryptocurrency assets using Chase debit cards or transferring money from a Chase account to a cryptocurrency platform, effective from October 16.
It's worth noting that Chase UK's decision does not represent a wider policy across the entire JPMorgan group. However, as early as 2018, JPMorgan had prohibited its customers from using credit cards to buy cryptocurrencies. The bank's CEO, Jamie Dimon, has consistently criticized cryptocurrencies, branding bitcoin, the most well-known cryptocurrency, as a “hyped-up fraud” in January.
Chase UK, with a customer base of 1.6 million and £15 billion in deposits as of May, holds a relatively small share of the UK retail banking market. Nonetheless, an increasing number of UK banks are imposing restrictions on how customers can engage with digital assets. In March, NatWest implemented transaction limits to protect consumers from substantial financial losses, while HSBC announced that customers would no longer be able to purchase cryptocurrencies using credit cards a month earlier.
Traditional high street challenger bank TSB began blocking cryptocurrency transactions in 2021 due to concerns over high fraud rates, while digital bank Starling has prohibited the buying and selling of cryptocurrencies since November of the same year.
Cryptocurrencies like bitcoin and ether remain largely unregulated in the UK, although regulators are actively assessing methods for overseeing this asset class. In an effort to combat misrepresentation, cryptocurrency firms operating in the UK will need to adhere to new rules mandated by the Financial Conduct Authority starting from October 8, including a ban on “refer a friend” promotional schemes.
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