Crypto Loses Support From Facebook And Major US Banks As Bitcoin Hits Two-Month Lows
It looks like Bitcoin and other cryptocurrencies are heading down the drain as they lose major support from Facebook and huge US financial institutions.
Last week, as part of Facebook’s overhaul of its news feed, a new policy was rolled out that essentially prohibits ads for Bitcoin, other cryptocurrencies, and initial coin offerings (ICOs). An announcement posted on Facebook Business by Product Management Director Rob Leathern read: “Two of our core advertising principles outline our belief that ads should be safe, and that we build for people first. Misleading or deceptive ads have no place on Facebook. We’ve created a new policy that prohibits ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.”
According to Facebook, the move was to protect users from scams that frequently come with ICOs and cryptocurrencies and will stay in procedure until such time that Facebook comes up with a system to better detect fraudulent ads.
Although Facebook’s new policy seems small at surface value, the policy further exacerbates Bitcoin’s downward centripetal movement in the past few weeks. What people believe now is Bitcoin’s impending crash has been spurred by Bitcoin’s continuous downhill climb since the year started and that more countries are now preparing—or at least planning—to regulate the digital currency.
Today, Bitcoin has reached new lows and is more than half of its peak value in December. Bitcoin is currently trading at around $8,000, far below its record value of $19,000 in December 16—the sudden drop coming in only less than two months. This has scared many major lenders, who have announced that they are banning the purchase of Bitcoin and other cryptocurrencies using their services.
Major US banks Bank of America Corp. (BoFA), JPMorgan Chase & Co., and Citigroup Inc. announced Friday and Saturday that their customers will now be unable to purchase cryptocurrencies using any of their credit cards, Bloomberg reported.
JPMorgan explained this move is to disassociate themselves from the increased risks and losses that come with the dropping price and unregulated nature of crypto. According to their data, many credit card owners who purchased crypto during its highs last year are now left unable to pay off their debts because of the sharp drop of Bitcoin’s price. And to prevent more of these delinquencies from happening, the banks have decided to drop crypto support.
While more corporate institutions are dropping support of Bitcoin and crypto (many payment companies and retailers such as Stripe, Valve, and Steam have stopped receiving crypto payments), many remain hopeful for the digital currency. In fact, Brian Kelly, the CEO of BKCM LLC, an investment firm focused on digital currencies, told CNBC that next week will be big for the crypto market.
“So on February 6th the Senate Banking Committee are having a meeting and they’re going to be talking about what the regulatory oversight role of the SEC and the CFTC should be when it comes to cryptocurrencies and virtual currencies,” Kelly said. “One of the biggest problems we’ve had in this market is institutional investors don’t know where exactly they stand regulatory wise, what can they do, what can’t they do, because no one agency has really said this is our domain and there’s not one overarching regulatory scheme.”
“So this could be a green light to institutional investors,” Kelly adds. “Once you get that regulatory clarity and we can start to think about what’s going on here and in particular when you’ve seen the regulations trying to stamp out bitcoin in other places, here in the US could be a bitcoin up.”