London-based challenger bank Kroo has banned its clients from trading cryptocurrencies “to keep user accounts and funds safe.”
“After May 30, 2024, in order to keep your accounts and funds safe, we will no longer process bank transfers or card payments to or from cryptocurrency providers,” the bank's updated terms of use read.
Additionally, Crow Bank noted that it will “freeze or restrict accounts” used to purchase or trade cryptocurrencies, and may block accounts that trade or receive credits from cryptocurrencies.
“If such activity is detected, we will not process any related payments and may close your account if such transactions continue,” the bank warned.
The move comes at a time when cryptocurrency-related online scams and fraudulent activities are on an alarming rise.
Recently, the UK's Lloyds Bank issued an urgent warning about the rise in cryptocurrency scams targeting young investors, which surged 23% last year, noting that cryptocurrency victims lose an average of £10,741, more than any other type of scam.
Crow Bank is the latest UK-based challenger bank, including Starling Bank and Chase UK, to ban crypto-related transactions. Starling Digital Bank banned crypto transfers in 2022, citing “high risk” in crypto transactions. Last October, JPMorgan's UK retail bank, Chase UK, restricted customers' access to cryptocurrencies amid growing concerns over their illicit use.
UK bank NatWest has also taken a similar approach, placing limits on crypto spending for its customers. NatWest noted that customers can only spend up to £1,000 in crypto per day, and £5,000 in any 30-day period.
Too harsh on the crypto community?
The measure is not a restriction but a total ban. In addition to fraud, regulatory difficulties may also be one of the reasons for the ban.
Recently, the trustworthiness of cryptocurrencies has been called into question due to the UK Financial Conduct Authority's (FCA) marketing transparency regulations.
Crews' move further emphasizes the idea that cryptocurrencies cannot be trusted. David Janczewski, CEO of blockchain protection firm Coincover, emphasized at the time of Chase Bank's crypto ban that “rather than banning all crypto-related activity, which could ultimately lead to customer churn, we can prevent theft and loss by implementing stronger safeguards that address these issues at their source.”
