The blows just keep on coming for cryptocurrencies. Today we learned that Discover Card, and Discover Financial Services (DFS) is disallowing cryptocurrencies from being purchased. What is going on here:
Discover CEO David Nelms, 56, told Jennifer Surane, “It’s crooks that are trying to get money out of China or wherever. Or if someone steals our credit card numbers they’re going to ask for payments in Bitcoin. Those are the only use cases I’m actually seeing today,” he dismissed, giving a decided thumbs down to cryptocurrency as a phenomenon. It’s “not like our customers are clamoring to use it.”
Discover Card holders were known to stalk online forums asking about other users’ experience with attempting to buy cryptocurrency on exchanges. The answer was clear: not possible. Mr. Nelms has removed all mystery with the above statements. Discover wants no part in the burgeoning market of decentralized money.
The company has been around in one form or another for over three decades. With 44 million customers, Discover ranks in the top five popular US credit cards behind Visa, Mastercard, and American Express.
What’s in Your Wallet?
It’s hardly the only credit card to publicly come out against cryptocurrencies. In fact, Capital One recently tweeted “We currently decline credit card purchases of cryptocurrency. We’ll continue evaluating our policy as this market evolves.” In a follow up, Breitbart was able to get a more expansive comment:
“Capital One is currently declining credit card transactions to purchase cryptocurrency due to the limited mainstream acceptance and the elevated risks of fraud, loss, and volatility inherent in the cryptocurrency market. Capital One continues to closely monitor developments in cryptocurrency markets and exchanges and will regularly evaluate the decision as cryptocurrency markets evolve.”
Both of these come after Visa basically shut down huge European markets, leaving many crypto enthusiasts without much recourse.
One theory, beyond fear of eventual competition, is government regulations and liability, with regard to anti-money laundering laws and know your customer onboarding, make it too risky for credit card companies and banks to participate in crypto.
Whatever the case, Discover’s Q4 earnings fell short of analysts’ projections, and its profits dropped by over thirty percent, presumably unrelated to their prohibition on digital assets.
Sooner or later, however, in freer economic arrangements, customers make known their preferences, and 44 million users being denied a chance to experiment with bitcoin and other digital assets could quickly demand alternatives.