Wells Fargo and Coinbase are two different companies with two different agendas. Wells Fargo has been an established bank servicing North American (including Canadian and Puerto-Rican) customers since 1852. Coinbase is a popular cryptocurrency trading platform that people use to convert investments into crypto and trade with other investors. As a member of Wells Fargo, you may try to purchase crypto off of Coinbase using your credit card. The transaction may even seem like it goes through.
However, Wells Fargo banned crypto purchases on their issued cards starting in 2018. Even transactions that appear completed will likely reverse in a week or two. Read on to learn more about this troubled relationship and why you need to find an alternative payment method to purchase crypto on Coinbase.
Wells Fargo’s History with Cryptocurrency
Henry Wells founded Wells Fargo in 1852. The bank has remained on the cutting edge of finance and insurance services ever since, becoming one of the most well-known banking institutions in North America and the third largest in terms of value. They provide online and mobile banking services as well.
In 2016, the company used blockchain tech to conduct a transaction for a cotton shipper transporting products to China. No shipment had been transacted through blockchain before this one.
However, despite their own use of blockchain for large clients, starting in 2018, Wells Fargo banned the purchase of cryptocurrency using their issued cards. They did so, according to their spokesperson, “due to the multiple risks” of crypto investment. Other major US banks also banned their cards from being used for crypto purchases, including Bank of America, Citigroup, J.P. Morgan Chase. They offered similar reasons.
Banks around the world have banned crypto, fearing their own payment processing services would be disrupted by using crypto technology, such as the trading software on Coinbase. This may prove to be sad news for investors that had hoped to use their bank-issued cards to trade crypto on major investment platforms.
Crypto Crime: Where Banks May Have a Point
Crypto crime reached an all-time high in 2019, resulting in $4.5 billion of losses for investors globally. Ahead of this curve, banks that banned crypto purchases using their credit cards, like Wells Fargo, didn’t incur these losses.
In addition to fraud and misappropriation, crypto hacks are still a real threat to people hoping to diversify their portfolios using crypto. Coinbase has its own security measures. However, hackers, attracted to increasing investments, find new ways to overrule security verification. This represents a particular problem for decentralized loan systems like DeFi.
DeFi requires little verification to conduct transactions, in order to avoid compliance. However, this means that hackers have fewer snags in identification on their quest to steal funds.
Where Crypto Goes from Here
Wells Fargo Coinbase may be a partnership that will never happen. Those who hoped to combine their investments should look elsewhere. However, until security improves, lines of credit represent risky payment methods in cryptocurrency, one which large banks banned hoping to protect their investment. It may be a frustrating detour on your road to portfolio diversification, but at least now you know what to expect.
