Citi India bans use of its cards for cryptocurrency purchases

Close on the heels of Indian private banks shutting down accounts of bitcoin exchanges, Citi India on Tuesday barred use of its debit or credit cards for purchase of bitcoin or any other cryptocurrency. Citi is the only multinational bank among the top five card issuers in the country.

This comes after banks including State Bank of India, ICICI Bank, HDFC Bank, Axis Bank and Yes Bank last month suspended the accounts of major bitcoin exchanges in the country.

''Given concerns both globally and locally, including from the Reserve Bank of India, cautioning members of the public regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with bitcoins, cryptocurrencies and virtual currencies, Citi India has decided to not permit usage of its credit and debit cards towards purchase or trading of such bitcoins, cryptocurrencies and virtual currencies,'' the bank said in a communication to cardholders.

Responding to a media query, Citi said that the decision was part of a global policy adopted by the bank. JP Morgan, Chase, and Bank of America have globally decided to disallow use of their cards for the purchase of bitcoins. Although JP Morgan and Bank of America have operations in India they are not in retail banking and do not issue cards here.

While payment companies Visa and MasterCard have not blocked cryptocurrency payments they maintain a cautious approach. ''Visa allows credit, debit and certain prepaid Visa products to be used to purchase cryptocurrency, provided such transactions are legal in both the buyer's and seller's jurisdictions. Issuers make authorisation decisions and apply their own risk policies when evaluating each authorization request,'' said a Visa spokesperson in response to a Times of India query.

MasterCard has classified cryptocurrency purchases as 'cash advances' that would attract a fee and interest charges.

Earlier banks had said that purchase of cryptocurrency fell in a grey area. While Indians are allowed to make cross-border purchases these are restricted for foreign exchange trading or for speculation.