A sizeable number of banks do not allow their customers to purchase bitcoin with credit cards. But according to billionaire investor Mike Novogratz, that distrust will eventually change.
The founder of U.S.-based Galaxy Digital told Bloomberg that financial corporations, including Visa and Mastercard, will enable bitcoin purchases with credit cards within the next two years. He reckons that the entry of regulated financial institutions will change the way credit card companies look at the bitcoin industry.
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— Michael Novogratz (@novogratz) July 3, 2019
Novogratz borrowed sentiments from a couple of influential brokerage firms that announced bitcoin-enabled products earlier this year. U.S.-based brokerage frame TD Ameritrade, for instance, launched bitcoin futures trading services and further invested in ErisX, a regulated cryptocurrency exchange, to offer traders access to cryptocurrency spot, as well as future contracts. Novogratz said:
“You have got exchanges that are regulated — there are the real players in the game. You are getting more and more pipes — ways for people to participate. One can buy bitcoin on their TD Ameritrade account. That’s a big, big deal.”
“I bet that in the next two years, Mastercard and Visa will accept bitcoin with their credit cards,” he added, stating the payment giants were already experimenting with the technology with Libra, a blockchain-enabled payment project introduced by Facebook. The move would bring bitcoin before Visa’s 50 million worldwide customers in a single masterstroke.
Bitcoin and Banks
Novogratz’s statements follow the launch of many Visa and Mastercard-enabled cryptocurrency payment services but that of debit cards. Banks so far have expressed concerns over allowing customers to use credit cards to purchase bitcoins. Many of them fear that lenders would lose their money while investing in volatile assets like cryptocurrency. At the same time, some also fear that criminals would use the blockchain assets to facilitate money laundering.
Forbes contributor Naeem Aslam revealed that his bank barred him from purchasing bitcoin using his credit cards because they could not verify the source of funds. In an article published last year, Aslam stated that his bank had no clue how to factor bitcoin capital gains into their accounts.
“But here is a big question: Should these banks be allowed to control one’s transaction when they already have approved their account,” he questioned at the time.