Lloyds Banking Group has banned customers from buying bitcoin on credit cards, afraid that wild gyrations in cryptocurrency prices could leave it footing the bill for unpaid debts.
The banking group has told its nine million cardholding customers at Lloyds, Bank of Scotland, Halifax and MBNA that it will not recognise virtual currency transactions on its credit cards with effect from today.
A sharp acceleration in the price of bitcoin and other virtual currencies such as ether and XRP in the run-up to Christmas provoked an explosion of interest in the market among ordinary savers suffering from years of low interest rates.
However, a 57% crash in value during New Year's trading has caught many novice investors flat-footed and nursing huge losses.
Bitcoin ended last week down 30% at $8,291.87 - way below the $19,000 it reached last November.
The crackdown comes as law enforcement agencies and regulators promise to tighten anti-money laundering rules to counter the use of anonymous virtual currencies by criminals who are looking to evade detection by the authorities.
Lloyds is currently the first of the UK's main banks to disbar bitcoin transactions on its cards, although several US banks, including JPMorgan Chase, Bank of America, Capital One, Discover, and CitiGroup have instituted similar cryptocurrency bans in recent months.