London-based challenger bank Kroo has banned its customers from engaging in crypto transactions in order to “help keep user account and money safe.”
“From 30th May 2024, to help keep your account and money safe, we will no longer process bank transfers or card payments related to and from crypto asset providers,” the bank’s updated terms and conditions read.
Further, Kroo bank noted that it would “freeze or restrict accounts” used to purchase or trade in crypto. It would also potentially block accounts that receive credits from crypto trading or transactions.
“If we detect such activity we will not process the payments involved, and if you persistently make such transactions we may close your account,” the bank warned.
The move comes at a time when there is a staggering increase in crypto-related online scams and frauds.
Recently, the UK’s Lloyds Bank issued urgent warning over raising crypto scams that surged 23% last year, targeting younger investors. The warning noted that crypto victims have lost £10,741 on average, more than any other type of scam.
Kroo Bank is the latest among other UK-based challenger banks including Starling Bank and Chase UK, in banning crypto-related transactions. Starling digital bank issued a ban on crypto transfers in 2022, citing “crypto activity to be high risk.” Last October, Chase UK, JPMorgan’s British retail bank, restricted customers’ access to crypto amid raising concerns over its illicit use.
UK’s NatWest Bank took a similar approach, where it had set limitations on crypto spending for its customers. NatWest noted that its customers can only make up to £1000 worth crypto payments per day and £5000 in 30-days.
Too Harsh on the Crypto Community?
The move is not a limitation, but an outright ban. Alongside fraud, another reason for the ban could be regulatory struggles.
Crypto’s trust has been recently called into question by the UK’s Financial Conduct Authority’s (FCA) marketing transparency regulations.
Kroo’s move further emphasizes the idea that cryptocurrencies are untrustworthy. David Janczewski, CEO of Blockchain protection company, CoinCover highlighted during Chase’s crypto ban, “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.”