Barclays Blocks Crypto Purchases With Credit Cards Over Debt Risks

Barclays bank has announced that it will block customers from using Barclaycard credit cards to buy crypto starting June 27. This decision was quietly confirmed in a newly updated FAQ section on the bank’s official website. According to Barclays, the move is driven by concerns over consumer protection and repayment risks. The bank warned that the volatility of crypto prices could expose users to debts they may be unable to manage. Additionally, digital assets do not fall under UK financial safeguards, leaving affected customers with limited recourse if a transaction goes wrong.

The bank explained its stance by stating, “We’re doing this because a fall in the price of crypto assets could lead to customers finding themselves in debt they can’t afford to repay. There’s also no protection for crypto assets if something goes wrong with a purchase, as they’re not covered by the Financial Ombudsman Service and Financial Services Compensation Scheme.” This move aligns with broader regulatory discussions in the UK, where the Financial Conduct Authority (FCA) has been exploring ways to restrict crypto purchases made with borrowed funds. The regulator has highlighted the risks associated with leveraging credit to invest in high-volatility assets, particularly for inexperienced retail investors.

Barclays’ decision comes just months after the bank made a significant investment in spot Bitcoin ETFs in the US. This investment places Barclays among the growing list of institutions gaining exposure to spot Bitcoin ETFs. The contrast between limiting customer access to crypto purchases and expanding its own crypto holdings points to an emerging divide in how traditional financial institutions approach the crypto sector. While the new policy may protect users from risky borrowing practices, it could also encourage investors to use non-traditional platforms. Considering this, industry analysts predict a growing demand for alternative on-ramps, such as fintech applications and decentralized services that bypass conventional banking systems.