On May 30th, 2024, Kroo, the UK-based digital challenger bank, decided to go big by banning all forms of cryptocurrencies. This decision was provoked by the fact that the crudest cases of fraud and scams linked to the use of cryptocurrencies have been recently rising.
Kroo has updated this controversial point in its policy, saying ‘’We do not allow any card payments or bank transfers to the providers of cryptocurrencies.’’
As for the policy, “After 30th May 2024, for account and money safeguard, we will cease to accept bank and card payments transfers with and from relevant crypto asset providers.”
In addition, Kroo has predicted that further severe restrictions and possibly account closure can happen to accounts that show patterns concerning buying or trading activities associated with cryptocurrencies. The bank’s advisory states that if we suspect bank activity, the bank shall refrain from processing the payments involved; if anyone continuously makes such transactions, we will close your account.
Therefore, it should be clear that Kroo’s particular move, as a financial institution, reflects how the company seeks to protect customers’ funds in light of the emergent and rife incidences of crypto-crime. This is why Kroo remains unyielding in its approach to bearing the risks of a fluid world of electronic payments and the more often unpredictable world of cryptocurrencies away from its account holders.
Rise in Crypto fraud prompts new bank policies
Kroo’s recent decision to stop processing Crypto-based transactions is well-timed, given the increased cases of fraud and online cryptocurrency scams.
Fearing this type of rise, reflected in the 23% increase of crypto-related felonies in the previous year, Lloyds Bank issued an important notice recently. It indicates that crypto scams are the most lucrative and simulated type of fraud, costing its victims, on average, £10,741.
Such conditions have provoked actions in response by the UK challenger banks amid this power struggle, and Kroo is no exception with its policy. Those include, for example, Starling Bank, which blocked users from sending cryptocurrencies in 2022, categorizing the behavior as “high risk.”
Another example is Chase UK, an affiliate of JPMorgan that restricted consumers’ access to it in October last year due to concerns about potential unauthorized activities. NatWest Bank also limited the spending freedom of crypto to its consumers by setting up £1,000 daily and £5,000 in thirty consecutive days spending capacity.
Kroo’s complete ban aligns with the trend of apprehension embracing the domain of financial services worldwide; however, it has stirred up discussion within the cryptosphere. They reason that such an approach may hurt customers and potential customers. CEO of Blockchain protection company Coin Cover during Chase’s crypto ban, “It is possible to prevent theft and losses by implementing enhanced security systems which target such vices at their root.
Another factor that impacted this decision is legal factors which are often the major driving force behind many operational strategies.
The Financial Conduct Authority (FCA) of the United Kingdom has recently shifted its attention towards marketing crypto-assets, and rightly so. There is a dire need for more transparency in the Crypto-asset market and preserving the interests of end consumers. This may have led to regulatory attention, causing Kroo to minimize its risks and go to the extreme of protecting its customers’ assets.
