Visa bans cryptocurrency-backed cards

Personal Finance


Visa ended its relationship with a large cryptocurrency card provider on Friday, causing thousands of people’s transactions to be declined and scrambling to figure out how to access their money.

The card provider WaveCrest confirmed in an email to CNBC that they were required “to immediately close all Visa cards.”

“As a licensed E-Money Institution, WaveCrest is required to safeguard funds to cover all of its issued electronic money and we can confirm that these funds are safe and available for redemption through other channels,” the statement read.

Visa, a payment network, did not immediately respond to a request for comment.

Wavecrest provided its services to a number of crypto-card companies, including Bitwala, Cryptopay, Wirex and TenX. These companies convert people’s cryptocurrencies into cash that is loaded on to a pre-paid card, allowing people to use the currency for everyday transactions.

Now these cards are invalid.

Dmitry Lazarichev, co-founder of cryptocurrency card company Wirex, said he’s received thousands of calls from frantic customers. He said his company has issued some 500,000 cryptocurrency debit cards to people across the world, although not in the United States.

“All the cards were shut down in one second,” Lazarichev said, adding that WaveCrest hasn’t been responsive. “We asked for more information, but they haven’t provided any.”

TenX, another cryptocurrency card company affected, tried to reassure users.

Card holders took to social media for answers.

Alexander T., the man in the above tweet, who declined to give his last name, said he uses his cryptocurrency card to book hotels and pay for groceries. Yesterday, he had been traveling from Spain to Switzerland, when he stopped in at a bar. His card was declined.

He’s afraid he’ll lose the money on his card.

“The problem is, I went on vacation,” he said. “I put a lot of money on this card.”

He also worries that this mainstream way of using bitcoin will vanish.

“For all people who use bitcoin for their day to day expenses, it was the only way to do that,” he said.

Last year, Visa and MasterCard prohibited cryptocurrency debit cards outside the European Union. But with Bitcoin becoming a household name, Lazarichev said the news came as a shock.

“We planned to enter the U.S. market by the end of this year,” he said.

More from Personal Finance:
Advisors: Here’s what you need to know before investing in bitcoin
Bitcoin is too risky to treat as a ‘serious’ investment, financial advisers say
Start the new year with a financial plan





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