Banks fear clients could be financially exposed from price falls if they buy crypto-currencies on credit.

Bank of America, JP Morgan and the UK’s Lloyds Banking Group no longer allow customers to buy bitcoin with credit cards, taking effect from this month, reports said.

JP Morgan is expected to start its ban from Saturday because it is worried about the credit risk of those who make purchases through their cards, a report on Bloomberg said. The report said US-listed Bank of America has taken the same step. The BoA ban only applies to credit cards, and will not affect customers who wish to purchase crypto-currencies using debit or ATM cards, the newswire said.

Bloomberg added that BoA cited anti-money laundering regulations for the move, as well as the potential for thieves to convert stolen credit cards into crypto-currency stashes. 

In a separate report, the BBC said Lloyds Banking Group will today tell its nine million credit card customers that it will block any attempts to buy bitcoin after the digital currency lost more than half its value in just two months. The price of bitcoin has fallen by 57 per cent from £14,000 in December to less than £6,000 ($8,455) and the bank fears it could end up footing the bill for unpaid debt should the price fall any lower.

The banks fear that customers can buy more crypto-currency than they can afford, leaving the exposed to sharp falls in the currency, or outright bans on its use.

Facebook has reportedly banned adverts for Bitcoin and other cryptocurrencies on its sites after recent criticism from users about scams and hoaxes being promoted in their newsfeed. Late in January, the global head of the chief investment office at Deutsche Bank, Germany's largest bank, said he did not advise clients to invest in such currencies because they risked losing all their money. Credit Suisse chief executive Tidjane Thiam has said bitcoin and other cryptos create a "number of challenges".

Jamie Dimon, CEO of JP Morgan, described bitcoin last year as a “fraud” that would likely “blow up” and said he would fire any of his staff found trading it, although in January he said he regretted using the word "fraud" to describe it and said he saw potential in the blockchain tech that powers such currencies. 

Some forms of financial speculation can still be funded from credit cards. CityIndex, the spreadbetting firm, says it allows clients to open accounts with credit cards such as MasterCard and Visa although the firm also insists on clients having a minimum amount in an account to cover the initial cost of a first trade. The brokernotes.co website said there are at least five such trading platforms that allow credit cards as a form of payment. Under UK regulations, for example, brokers require data from clients to ensure they can support their positions, as well as require data for KYC purposes.