London-based bank Challenge Kroo has banned its customers from engaging in cryptocurrency transactions to “help ensure the security of the user’s account and money.”
“From May 30, 2024, to help ensure the security of your account and money, we will no longer process bank transfers or card payments related to and from crypto asset providers,” – The bank’s updated regulations read.
In addition, Kroo bank noted that it would “freeze or restrict accounts” used to purchase or trade cryptocurrencies. It would also potentially block accounts that receive credits from cryptocurrency trading or transactions.
“If we detect such activity, we will not process the related payments, and if you continuously make such transactions, we may close your account,” the bank warned.
The move comes at a time when there is a staggering increase in fraud and online sc ams related to cryptocurrencies.
The UK’s Lloyds Bank recently issued an urgent warning following an increase in cryptocurrency fraud, which rose 23% last year and targeted younger investors. The warning noted that cryptocurrency victims lost an average of £10,741, more than any other type of fraud.
Kroo Bank is the latest among other UK challenger banks, including Starling Bank and Chase UK, to ban cryptocurrency-related transactions. Digital bank Starling issued a ban on cryptocurrency transfers in 2022, citing “high-risk cryptocurrency activities.” Last October, Chase UK, JPMorgan‘s UK retail bank, restricted customers’ access to cryptocurrencies over concerns about their illegal use.
Britain’s NatWest Bank has taken a similar approach, where it has set restrictions on cryptocurrency spending for its customers. NatWest noted that its customers can make cryptocurrency payments worth a maximum of £1,000 per day and £5,000 within 30 days.
Kroo too harsh on the cryptocurrency community?
This move is not a restriction, but an outright ban. In addition to fraud, another reason for the ban could be regulatory problems. Confidence in the industry was recently challenged by the UK Financial Conduct Authority’s (FCA) marketing transparency regulations .
Kroo’s move further underscores the view that cryptocurrencies are untrustworthy. David Janczewski, CEO of blockchain protection company CoinCover, stressed during the Chase cryptocurrency ban, “Rather than banning all cryptocurrency activity, which can ultimately drive customers away, theft and losses can be prevented by putting in place more robust security measures that can address these issues at the source.”
