Bank of Montreal, one of the major financial institutions in Canada, is censoring payments made to cryptocurrency exchanges and businesses.
Earlier this week, several digital currency investors and analysts including Francis Pouliot and Pompliano have revealed that Bank of Montreal has effectively disallowed users from purchasing cryptocurrencies like bitcoin and Ethereum with its credit and debit cards, as well as online payment methods.
Previously, Barclays, Citibank, JPMorgan, and other leading banks in the US and Europe had banned cryptocurrency purchases with credit cards to prevent their customers from obtaining debt to invest in the highly volatile digital currency market. Although risk is involved in every asset and trade, and users should have freedom to invest in whichever asset they wish to allocate their funds in, the move from the abovementioned major banks was understandable given that many speculators have overspent their budget to invest in the rapidly moving cryptocurrency market.
However, the decision to ban all types of online payments made to digital currency exchanges by Bank of Montreal is unprecedented, and no other bank in the world has imposed such a policy as of yet.
The official document released by Bank of Montreal entitled “Blocking Cryptocurrency Transactions For BMO Credit Cards, Debit Cards, and Interac Online Payment” read:
“Effective immediately, BMO will be blocking cryptocurrency merchant transactions. This decision was made due to the volatile nature of cryptocurrencies, and to better protect the security of our clients and the bank.
Clients attempting any cryptocurrencies transactions using a BMO Debit or Credit MasterCard will be blocked, and will be presented with a screen message advising them that transaction cannot be completed.”
The issue with the reasoning behind Bank of Montreal’s decision to ban all types of online payments to cryptocurrency exchanges is that the bank claimed prohibition of digital currency payments is better for the security of its clients and the bank itself. Evidently, the prevention of payments made to cryptocurrency exchanges is completely irrelevant to the security of clients, and the volatility of the market doesn’t hugely impact merchants given that merchants could enable real-time conversions from digital currency payments to cash.
Pompliano, a respected crypto asset investor and researcher better known as Pomp, stated:
“The Bank of Montreal has blocked all credit, debit and online payments to cryptocurrency exchanges because they claim Bitcoin is too volatile. The legacy financial system remains the biggest single point of failure to the success of crypto markets.”
Pouliot also criticized the weak argument of Bank of Montreal, as he emphasized that the rash decision of the bank was not made to “protect users from volatility.”
In the long-term, financial institutions that remain open to newly emerging asset classes and markets like the cryptocurrency market will be at the forefront of financial revolution. In South Korea, as the country’s largest bank rejected cryptocurrency businesses, the second biggest financial institution Shinhan began to service blockchain companies and take authority over the market.
Self-isolation from the cryptocurrency industry will inevitably lead to competitor banks trying to take over the cryptocurrency market by embracing cryptocurrency exchanges.