Lloyds' bitcoin credit card ban: Sensible but too late to have much impact

It’s usually best for writers to avoid cliches like “shutting the stable door after the horse has bolted”.

However, given that the corporate symbol of Lloyds Banking Group eats oats and goes “neigh” you’ll have to forgive me just this once because that makes it just perfect for a discussion about the bank’s decision to block the credit card payments of people trying to trade bitcoin.

The move affects customers with cards issue by Lloyds, Halifax, and MBNA. It should be noted at the outset, however, that it doesn’t apply to their debit cards. Lloyds and Halifax customers crazy enough to want to use their own funds to play are free to do so. The bank is not trying to play nanny with their money. It just doesn’t want them using its shareholders’ money for the purposes of gambling on a financial horse whose legs could snap at any given moment.

The internet is positively bursting at the cyber-seams with ads urging people to log on to their sites for the purposes of trading the thing, with pretty graphs heading ever higher behind friendly and attractive narrators,

Those ads have been working, and all too well. If this move by Lloyds ends up proving to be too late to save it much money, it’s no less true of Facebook’s move to pull them with the aim of protecting its users.

And just as there are other credit card issuers you can still use to buy bitcoin, so are there are other places to find the ads.

Regulators have issued warnings. Politicians have started to fret. Both know, notwithstanding the potential use of cryptocurrencies for the purposes of money laundering and other criminal enterprises, that when the crash comes it is going to hurt a lot of people, and lead to a lot of uncomfortable questions being asked.

They also know we’ve been here before. When the Swiss Central Bank shocked the world’s financial markets by calling time on the Swiss franc’s euro tether, a lot of people got very badly hurt. It subsequently came to light that some of them had only very modest means. They were teachers, pianists and others who’d been tempted into spread betting on markets that even the professionals sometimes struggle with.

The easy profits they thought that they would make evaporated quicker than a bowl of water left in the middle of Death Valley.

That scandal might come to resemble a light breeze compared to the hurricane of bitcoin going pop the way it’s doing.

Lloyds’ move has value. It may still save some of its customers some pain, as well as saving its shareholders some money. Other banks should follow its lead, and will do so if they have any sense. The Financial Conduct Authority might like to nudge those that don’t.

But the bitcoin horses are running free as the stable door swings in the wind, and with the cryptocurrency’s value currently crashing, it looks like a serious dose of grass sickness is on the way.​