FameEX Hot Topics | UK Digital Bank Bans Clients from Making Crypto Transactions

Kroo, a digital bank headquartered in London, has recently joined other U.K.-based financial institutions like Starling Bank and Chase UK in prohibiting its clients from conducting cryptocurrency transactions. This policy change, effective from May 30, 2024, is largely in response to a significant rise in online fraud linked to cryptocurrency dealings.

The updated terms and conditions of the bank now include clauses that allow Kroo to decline any bank transfer requests or card transactions related to cryptocurrencies. The bank clearly states, “[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.” This measure aims to mitigate the risks associated with the high incidence of scams involving cryptocurrencies.

In addition to these specific crypto-related provisions, Kroo has issued a general warning that similar actions could be taken for other valid reasons deemed necessary to protect the integrity of its banking operations. Clients affected by these new regulations are advised to notify payees making direct debits to halt such payments immediately.

While the bank has not publicly disclosed the precise reasons for ceasing support for cryptocurrency transactions, insights from a Paypers report suggest that the move aligns with a broader banking industry trend. This trend reflects increasing efforts to combat the growing challenge of crypto-related fraud, which saw a 23% increase in 2023.

By implementing these measures, Kroo aims to safeguard its clients from the potential pitfalls of crypto transactions, particularly the elevated risk of fraud that has been evident within the sector. The decision reflects the bank’s commitment to maintaining a secure and reliable banking environment amid evolving market conditions and emerging financial technologies.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.