Kroo Bank to Ban Crypto Transactions from May 30 Amid Rising Fraud Concerns

Kroo, a digital bank based in London, has announced a significant policy change that will prohibit its customers from engaging in cryptocurrency transactions starting May 30, 2024.

The bank aims to enhance the security of user accounts and funds by disallowing bank transfers and card payments to and from crypto asset providers.

This move is intended to protect customers from potential fraud and security risks associated with cryptocurrency transactions.

Details of the Ban

According to Kroo’s new terms and conditions, the bank will also “freeze or restrict accounts” involved in purchasing or trading cryptocurrencies.

Accounts receiving funds from cryptocurrency transactions will face similar restrictions. The bank has made it clear that if it detects such activities, the payments involved will not be processed.

Persistent attempts to make these transactions may result in account closure. This stringent policy reflects Kroo’s commitment to mitigating risks in the digital banking sector.

Rising Crypto Fraud Concerns

This decision comes amidst a surge in cryptocurrency-related scams and frauds. Lloyds Bank has reported a 23% increase in crypto fraud last year, primarily targeting younger investors.

Victims of these scams have lost an average of £10,741, which is higher than losses from other types of fraud. In response to these rising threats, Kroo joins other UK challenger banks like Starling Bank and Chase UK in banning cryptocurrency transactions.

In 2022, Starling Bank labeled crypto activities as “high risk,” leading to a similar ban.

Broader Regulatory and Security Implications

NatWest Bank has also taken measures to limit its customers’ cryptocurrency spending, capping payments at £1,000 per day and £5,000 over 30 days.

These moves indicate a broader trend among financial institutions to tighten controls on cryptocurrency transactions due to fraud and regulatory concerns.

The UK’s Financial Conduct Authority (FCA) has recently questioned the transparency of cryptocurrency marketing, further influencing these stringent policies.

While some in the cryptocurrency community view these measures as overly restrictive, others see them as necessary steps to enhance security.

David Janczewski, CEO of blockchain protection company CoinCover, suggests that instead of outright bans, banks could implement more robust safety measures to prevent theft and loss.

Kroo’s decision underscores the ongoing debate about the balance between innovation and security in the cryptocurrency space. As regulatory scrutiny intensifies, banks and financial institutions are likely to continue implementing policies aimed at safeguarding their customers from the inherent risks of digital assets.