The roller coaster price fluctuations of bitcoin has kept the cryptocurrency prevalent in the headlines for months. This week, bitcoin made it to the list of credit card fraud concerns, with — as you can probably guess — stolen identities being the root of the problem.

An LA Times article explored the chief concerns around cryptocurrency scams and why banks are getting increasingly skeptical about bitcoin transactions. To start, major banks have reportedly said they will decline transactions that involve customers using credit cards to buy bitcoin. The concern here is that borrows will avoid paying for those bitcoins, particularly if they buy high and bitcoin's price plunges. But the credit risk fears from financial institutions goes far beyond simple purchases of the cryptocurrency itself.

Among the top reasons for this is the belief that the anonymity of cryptocurrency could lead to a fraudsters opening a credit card account with either a stolen identity, or even an entirely new synthetic identity. As we’ve covered in previous posts, synthetic fraud allows hackers to set up accounts in a person’s name that appear to be authentic, but are actually fictitious.

As pointed out in the LA Times report, the real fear of bitcoins purchased on a credit card is that “the fraudster would then be able to convert the credit line into a hoard of digital cash that would be almost impossible to trace.” Not being able to track and trace fraud is already a concern for banks, so it’s only natural bitcoin would flag this fear.

As Rippleshot Co-Founder Canh Tran detailed in a recent report on the state of card fraud, the construction of new synthetic IDs is based on combining truthful and false information to build a credit file and then open new accounts, which is perpetrated at scale by opening hundreds of new accounts. Much like the fears about bitcoin purchases being more difficult to track, synthetic fraud is harder for issuers to spot since the account typically appears to be legitimate. This causes delays in spotting the fraud, if caught at all, which can send banks down a spiral of chasing credit card and identity fraud. Due to the rapidly changing price of bitcoin, its connection to criminal activity, and the inability to predict its true value, this has put banks on higher alert when considering how to implement fraud management strategies around the cryptocurrency.

Earlier this year, JPMorgan Chase CEO Jamie Dimon walked back his previous comments where he called bitcoin “a fraud,” suggesting that he is starting to buy into the power of blockchain technology itself. Still, that doesn’t mean the bank wants to allow customers to use their cards to buy bitcoin. The LA Times report cited sources indicating that JPMorgan, along with Bank of America and Citibank have declined bitcoin purchases.