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Comment by RIMR | Hacker News Reader

Again, spending credit on crypto isn't the risky behavior.

Borrowing money you cannot pay back is the risky behavior.

Just because people were enticed by cryptocurrency doesn't mean that cryptocurrency is the problem. The problem is spending more money than you can afford to spend.

We already have a system of checks and balances for this. If you borrow more money than you can pay back, you take a hit on your credit that can last years, and banks will trust you less in the future for your high-risk behavior.

Anyone with a credit card should be able to use their line of credit to purchase anything they please - your history of paying the debt back is all that really should matter, not what you spent the money on.

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Its probably also about fraud and chargebacks.

Take a look at what AMEX said when they banned porn 18 years ago:

https://www.zdnet.com/article/amex-just-says-no-to-porn-site...

>"The decision was ... based on about a year's worth of work we've done with this industry," Fisher said. "There was an unacceptably high level of customer disputes. We worked with the industry, but the challenges remained, and we just decided it was no longer profitable or practical to work with this industry."

(I think I recall reading porn companies pay exorbitant credit card processing fees due to high chargebacks.)

I can imagine a higher than average percentage of Bitcoin purchases were fraudulent and the card issuers were having to deal with a ton of chargebacks and disputes. If these purchases yielded more cost than profit, they'd be crazy not to ban them - you don't participate in a business activity where you are losing money.

> Anyone with a credit card should be able to use their line of credit to purchase anything they please

There is no "should". The lenders are private companies who are lending you money at their own discretion; it's entirely their prerogative to stipulate how that money can be used. Naturally, when a certain product category has a high default rate, the lenders act in accordance with their self-interest and stop allowing their money to be squandered by blockchain gambling.

> We already have a system of checks and balances for this. If you borrow more money than you can pay back, you take a hit on your credit that can last years, and banks will trust you less in the future for your high-risk behavior.

There's no reason the banks cannot be proactive in assessing risk and protecting themselves from high-risk purchases. You can't buy poker chips or stocks with credit cards; a ban on buying crypto with credit is in line with this.

Your history of paying the debt back is likely to change for the worse if you're buying some shitcoin with the expectation of reselling at a profit rather than budgeting for repayments from your salary like if you'd bought food or a sofa. Credit card companies have an interest in not supporting behaviour which makes clients a higher risk than their current credit rating would suggest, and that includes not funding gambling or investment products. Especially where the product class is also disproportionately likely to be used as a means of converting a stolen card to untraceable cash and disproportionately likely to be subject to merchant fraud.

The overlap between the set of people who "invest" beyond their means in cryptocurrency and the set of people with so little grasp of risk management they express views like "anyone with a credit card should be able to use their line of credit to purchase anything they please" is of course another strong reason for them not to want to touch crypto with a bargepole...

Again, this assumes that everyone buying cryptocurrencies are financially irresponsible people.

I have been doing this for years. While I have been lucky to consistently pull a profit, I never invested more than I could afford - and I certainly never planned to see a single cent I invested return to me (as one should assume with any investment).

If you are buying any cryptocurrency with the expectation of reselling at a profit, and you are falling into more debt than you can afford to be in while doing so, the issue was never cryptocurrency, but rather your willingness to borrow more money than you can afford to pay back.

Given that profits were never a guarantee, anyone expecting guaranteed profit already exhibits the kind of high-risk financial decision-making that deserves a low credit score as a consequence for unpaid debts, regardless of what they spend the borrowed money on.

It's not even about financial responsibility; I'm in no way advocating for chargeback fraud, but people overwhelmingly win disputes and the way these payments are processed promote ease-of-use and ease-of-disputes.

Crypto companies could default to push payments and/or micro-deposits for verifying ownership of a fiat instrument, but people want their coinz now and that causes friction that shrinks user activation funnels.

Merchants have to keep their CB ratios under 1%, or else Visa/MC/the bank processing their fiat will fire them. Bank fraud analysts probably have their own bank-side incentives to give customers the benefit of the doubt, and it's too easy for someone to maliciously load up on 2+ months of purchases, walk to their bank, state "I've never heard of Bitcoin someone hacked me and bought $6k in crypto I need that back", and win.

This assumes, based on the actual evidence, that the set of people who buy cryptocurrencies on credit are more likely to default on them than a set of people with the same credit ratings buying sofas (and that raising APRs to cover these increased losses will have other adverse affects on a credit card company's business).

If people are speculating beyond their means in crypto because they think the line of easy credit gives them a means to make a profit out of it, it's far easier for everyone involved to just cut the line of easy credit for the crypto, because the same person is probably not going to try to make a profit loading up their card with consumer goods or cars or other things the credit card company doesn't mind extending credit for instead.

I really don't understand why you believe it is reasonable or preferable to oblige credit card companies to take losses instead.

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