London-based digital bank Kroo has imposed a ban on cryptocurrency transactions, another blow for crypto traders who recently saw a sizable number of banks deciding not to finance the wobbly asset class.
Effective May 30, 2024, Kroo will reject bank transfer requests and card transactions related to cryptocurrencies.
The bank updated its terms and conditions to reflect this change: “[We can freeze or restrict your account if] you use your account to purchase or trade in cryptocurrency or you receive credits to your account which arise from cryptocurrency 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.”
Kroo’s decision mirrors similar actions taken by other U.K. banks, including Starling Bank and Chase UK, which have also blocked clients from engaging in cryptocurrency transactions. Data from Britain’s fraud reporting agency Action Fraud indicates that crypto fraud in the UK surged by 41% in the previous year, reaching a record high of £306 million ($372.3 million).
The bank advised customers impacted by the new policy to instruct payees making direct debits to their accounts to stop such payments. Kroo also noted that it would take similar action for any other valid reason that might arise.
Although Kroo did not explicitly detail why it is ending support for cryptocurrency transactions, the decision aligns with a growing trend among banks to address the increasing association of crypto with scams and fraud.
Chase UK, the British digital bank owned by JPMorgan, also prohibited its customers from conducting cryptocurrency transactions in late 2023. The prohibition includes using debit cards for crypto purchases or conducting outgoing bank transfers for crypto-related activities.
Chase, which made its European debut in the UK in September 2021, attributes the decision to the increased incidence of scams and fraud in the cryptocurrency space.
JP Morgan’s neobank cites an increase in scams and fraud in the cryptocurrency space, as well as reports of rising crypto fraud-related losses in the UK.
UK digital bank Starling also banned all customer payments related to cryptocurrencies. Describing the activity as “high risk and heavily used for criminal purposes,” the challenger bank told cardholders they are no longer allowed to purchase cryptos or receive incoming transfers from related exchanges or merchants.
Following the bankruptcy of FTX, the world’s second largest cryptocurrency exchanges, Lloyds, Barclays and RBS cut off card purchases and transactions involving cryptocurrency. The banks fear that allowing purchases of cryptocurrencies using money borrowed on credit cards could leave them on the hook if the buyers’ bets were wrong and couldn’t repay their debts.
Santander UK, the UK unit of banking giant Banco Santander, also placed restrictions on crypto transactions for its customers. The bank said this includes a £1,000 limit on individual transactions with crypto exchanges and a £3,000 limit on total monthly transactions. However, the London-based bank doesn’t limit funds transferred from crypto exchanges back into Santander accounts.
