JPMorgan Chase to Ban Customers from Purchasing Cryptocurrencies to Prevent Fraud
In an effort to combat the increasing number of criminals using digital assets to target victims, JPMorgan Chase UK will ban customers from purchasing cryptocurrencies starting next month. The ban, announced via email to customers on Tuesday, is a significant step forward as UK lenders try to prevent their networks from being abused for fraud and scams.
While several banks, including HSBC and NatWest, have imposed restrictions on their customers’ crypto purchases, outright bans are rare. According to Chase, its blockade for the UK, which will go into effect on October 16, is supported by data showing the high rate of crypto fraud and scams in the United Kingdom, including fake investments and misleading endorsements from celebrities.
Data from the fraud reporting agency Action Fraud revealed that losses from crypto-related fraud increased by over 40 percent in the year ending March 2023, exceeding £300 million for the first time. A senior banker estimated that between 20 and 25 percent of transactions sent from his customers’ accounts to cryptocurrency firms were related to fraud.
“We have seen a rise in the number of crypto scams targeting UK consumers, which is why we have decided to prevent the purchase of crypto assets using a Chase debit card or by transferring money from a Chase account to a crypto website,” the bank said.
Although Chase UK’s move is not part of a company-wide policy, JPMorgan stated in 2018 that it would prohibit customers from buying cryptocurrencies with credit cards. CEO Jamie Dimon has long been a critic of cryptocurrencies, stating in January that Bitcoin, the oldest and most well-known token, is a “fraud.”
Chase, which reached 1.6 million customers in May and has £15 billion in deposits, represents only a small portion of the UK retail market. However, an increasing number of lenders are restricting how customers can acquire digital assets. In March, NatWest implemented restrictions on transactions to exchanges to “protect consumers from losing life-changing amounts of money.” A month earlier, HSBC announced that customers could no longer purchase cryptocurrencies with their credit cards.
High-street challenger TSB started blocking cryptocurrencies in 2021 due to the high fraud rate, while digital bank Starling has prevented the buying and selling of cryptocurrencies since November last year.
Cryptocurrencies such as Bitcoin and Ethereum are largely unregulated in the UK, although regulators are considering the best way to monitor this asset class. To prevent misrepresentation, crypto firms operating in the UK must adhere to new rules set by the Financial Conduct Authority starting October 8, including a ban on “refer a friend” promotions.
