The Commonwealth Bank has banned its customers from buying bitcoin on credit cards after the recent plunge in the cryptocurrency's value, saying such purchases are no longer "appropriate."

The country's largest bank on Wednesday started sending text messages alerting affected customers to the ban, which follows similar action by large banks overseas in the wake of a more than 50 per cent plunge in bitcoin's value from last year's peaks.

CBA is believed to be the first Australian bank to ban customers from buying Bitcoin with credit cards. Credit:Bloomberg

The crackdown comes amid concern among banks overseas that further sharp falls in the price of bitcoin could leave some customers with large debts, creating extra risk for banks.

It is understood CBA also has concerns about the risk to customers' financial welfare of allowing people to borrow to invest in such a volatile asset at credit card interest rates, often near 20 per cent.