Kroo Bank, a London-based challenger bank has barred its customers from carrying out cryptocurrency transactions amid fraud concerns.
Kroo says the decision results from the growing number of online fraud cases and cryptocurrency scams, with fraudsters taking advantage of digital assets to dupe unsuspecting individuals. The ban is with effect from May 30.
Kroo Bank Trails Other Banks
The ban is not unique to Kroo customers alone. It echoes decisions by other challenger banks like Chase UK and Starlink who have implemented similar bans on crypto transactions as banks exhibit a collective concern over rising crypto fraud in the banking sector.
An update to the bank’s terms and conditions reflects the new directive.
“To help keep your account and money safe, we are introducing some restrictions to the type of payments you can make or receive with your Kroo account,” said the bank.
“From 30 May 2024, we will no longer support bank transfers or card transactions associated with cryptocurrencies.”
“We have made this decision because cryptocurrencies are increasingly being used by fraudsters as a way to scam people.”
Kroo Bank.
As part of the implementation of the initiative, Kroo indicated it would reject any payments made to cryptocurrency asset providers. The bank has also vowed not to process bank transfers that are related to cryptocurrency assets.
Banks Warn of Increased Fraud
The development comes as banks have warned of a spike in online fraud. Last year, Lloyds said cryptocurrency scams rose by 23 percent compared to prior year. The Financial Conduct Authority (FCA) cautioned the market on the dangers of investing in cryptocurrencies and the risk of being scammed.
In December 2022, Kroo “made a splash” with the launch of its current account product with an interest rate of 4.35%. The UK-licensed banking institution bagged an estimated 150,000 clients within the first year since the launch of the current account.
In 2023, Kroo reportedly raised £2 million from investors in a crowdfunded capital raising, which puts a pre-money valuation of £120 million on the bank. According to Crunchbase, Kroo has raised $74 million in total.
Ban To Bring Scrutiny and Transparency
While the ban on cryptocurrency transactions may inhibit the adoption of cryptocurrencies, it can also result in the reduction of fraudulent activities within the crypto market, and overall, a more secure ecosystem.
According to Ctol, this is also likely to reverberate across the cryptocurrency landscape, having an impact on both platforms and investors. Kroo’s move is expected to influence decision-making processes by other UK-based fintech companies, therefore reshaping the financial landscape and the broader tech space.
Cryptopolitan reporting by Enacy Mapakame