Kroo, a London-based digital bank, has taken a decisive step to address growing concerns surrounding cryptocurrency transactions by imposing a complete ban on such activities for its customers.
Effective May 30, 2024, the bank will no longer process bank transfers or card payments related to or from crypto asset providers.
TLDR
- London-based digital bank Kroo has banned its customers from engaging in crypto transactions, including bank transfers and card payments related to crypto, effective May 30, 2024.
- Kroo cited concerns over online scams, fraud, and the need to “keep user accounts and money safe” as reasons for the ban.
- Kroo warned that it may freeze, restrict, or even close accounts if customers persistently make crypto transactions or receive credits from crypto trading.
- Kroo follows other UK challenger banks like Starling Bank and Chase UK in implementing similar bans on crypto transactions.
- The move comes amid a surge in crypto-related scams and fraud in the UK, with the country’s fraud reporting agency, Action Fraud, reporting a 41% increase in crypto fraud in the previous year.
The move comes as the UK grapples with a staggering increase in online scams and frauds linked to cryptocurrencies.
According to data from Action Fraud, the country’s fraud reporting agency, crypto fraud surged by a concerning 41% in the previous year, reaching a record high of £306 million ($372.3 million).
Kroo’s decision to ban crypto transactions is primarily driven by the need to “keep user accounts and money safe,” as stated in the bank’s updated terms and conditions.
The digital bank has made it clear that it will take proactive measures to combat potential risks associated with cryptocurrencies, including freezing or restricting accounts used for crypto purchases or trading, as well as potentially closing accounts that persistently engage in such activities.
The bank’s warning is unambiguous: “If we detect such activity, we will not process the payments involved, and if you persistently make such transactions, we may close your account.”
This stance underscores the bank’s commitment to safeguarding its customers from the potential pitfalls of the crypto market, which has been plagued by high-profile scams and fraudulent activities.
Kroo’s decision aligns with a growing trend among UK-based banks and financial institutions that have taken similar steps to curb crypto-related transactions.
Starling Bank, another prominent digital bank, issued a ban on crypto transfers back in 2022, citing “crypto activity to be high risk.” Chase UK, JPMorgan’s British retail bank, also restricted customers’ access to crypto transactions last October, citing concerns over its potential illicit use.
The move by Kroo and other banks has drawn criticism from some quarters of the crypto community, who argue that an outright ban is an excessive measure that unfairly punishes legitimate users.
David Janczewski, CEO of blockchain protection company CoinCover, suggested that
“instead of banning all crypto-related activity, which may ultimately cause customers to leave, it is possible to prevent theft and loss by introducing more robust safety measures which can tackle these issues at source.”
The banks’ actions are not without merit, as they grapple with regulatory challenges and the need to protect their customers from the potential risks associated with cryptocurrencies.
The UK’s Financial Conduct Authority’s (FCA) marketing transparency regulations have called into question the trustworthiness of cryptocurrencies, further complicating the landscape for financial institutions.
