Lloyds Banking Group PLC (LON:LLOY) has banned its customers from buying Bitcoin on their credit cards amid concerns the cryptocurrency is headed for a crash.
The bank is thought to be the first in the UK to ban credit card customers from borrowing to buy Bitcoin. The ban applies to Lloyds Bank, Bank of Scotland, Halifax and MBNA customers, starting from Monday.
The decision follows a sharp fall in the value of Bitcoin with the digital currency ending last week down 30% to US$8,291.87 amid worries about a clampdown on cryptocurrencies by regulators. It marked the worst week since April 2013 and was well below the US$19,000 it reached last November.
Lloyds is worried that it will have to bear the cost if the price continues to fall and leave people who borrow money to purchase cryptocurrencies with large debts.
"We continually review our products and procedures and this is part of that,” a Lloyds spokeswoman said.
Economists predict Bitcoin crash
On Friday, the Nouriel Roubini, the economist credited with predicting the 2008 financial crisis, said Bitcoin was the biggest bubble in history and predicted the value of the digital currency would plummet “all the way down to zero”.
Warren Buffett has also advised investors against cryptocurrencies, saying the Bitcoin boom will “come to a bad ending”.
Regulatory clampdown
Bitcoin’s slide has followed reports that US regulators are investigating whether the surge in the price of the cryptocurrency was the result of market manipulation.
Cryptocurrencies have also been hit by South Korea's government saying it plans to ban trading of digital currencies. China, Russia, India and Germany have also issued warnings.
READ: Bitcoin blow-out continues as South Korea launches cryptocurrency ban
Last week Facebook said it has banned all advertising for cryptocurrencies because they are “frequently associated with misleading or deceptive promotional practices”. The move came after the social media network received criticism from users about scams and hoaxes being promoted in their newsfeed.