People shouldn't be able to buy crypto on credit for the same reason we cannot purchase lottery tickets, and Stocks on credit. If someone wants to buy Crypto on a loan, they can simply get a cash advance, and purchase their Crypto from their bank via debit. If your bank won't let you make purchases of Crypto via debit, get a new bank, and let them know why you are leaving.
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Debt adds to the risk of speculating. Sadly as an ex-banker I wonder about the real motives of the banks and I fear their motives have little to do with protecting their customers from losses.
How can the banks lose?
For example. if I mortgaged my house to borrow money to buy bitcoin and I bought Bitcoin in December and then bitcoin drops in value by half the bank still has my house for security if I go bankrupt. With a credit card the bank takes the lose if I can't pay back what I owe.
Great point. While it might be foolish to "invest" in cryptos or anything else on credit, the banks would not care if they had no skin in the game.
(Recent) history tells us that if the banks could somehow make a profit on our risky investments or if they had any "insurance / bailouts" against any losses, they'd be falling all over themselves, scrambling to shovel more credit into our hands.
good point @majes.tytyty and thanks for the upvote and your valued comment.
The bigger banks can gamble on large risky investment portfolios, like sub-prime mortgages, because they are considered "too big to fail".
That is, the public by way of tax dollars must bail them out rather than let them go under if their large risky investment portfolios go sour.
The best phrase I ever heard about it stated that our system was "Heads I win, Tails you lose" capitalism. The big banks win no matter what.
thanks for the Reply and comments mathiasian, much appreciated.