London-based challenger bank Kroo has banned its customers from engaging in crypto transactions to "help keep user accounts and money safe."

New Terms and Conditions

"From 30th May 2024, to help keep your account and money safe, we will no longer process bank transfers or card payments related to and from crypto asset providers," the bank's updated terms and conditions read.

Further, Kroo Bank noted that it would "freeze or restrict accounts" used to purchase or trade in crypto. It would also potentially block accounts that receive credits from crypto 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," the bank warned.

Rising Crypto Scams

The move comes with a staggering increase in crypto-related online scams and frauds.

Recently, the UK's Lloyds Bank issued an urgent warning over rising crypto scams, which surged 23% last year and targeted younger investors. The warning noted that crypto victims have lost £10,741 on average, more than any other type of scam.

Followed by Other Banks

Kroo Bank is the latest among other UK-based challenger banks, including Starling Bank and Chase UK, to ban crypto-related transactions. Starling Digital Bank banned crypto transfers in 2022, citing "crypto activity to be high risk."

Last October, Chase UK, JPMorgan's British retail bank, restricted customers' access to crypto amid rising concerns over its illicit use.

Partial Restrictions Elsewhere

UK's NatWest Bank took a similar approach, where it had set limitations on crypto spending for its customers. NatWest noted that its customers can only make up to £1000 worth of crypto payments per day and £5000 in 30 days.

Regulatory Concerns

The move is not a limitation but an outright ban. Alongside fraud, another reason for the ban could be regulatory struggles. Crypto's trust has recently been called into question by the UK's Financial Conduct Authority's (FCA) marketing transparency regulations.

Kroo's move further emphasizes the idea that cryptocurrencies are untrustworthy.

David Janczewski, CEO of Blockchain protection company CoinCover, highlighted during Chase's crypto ban, "Instead of banning all crypto-related activity, which may ultimately cause customers to leave, it is possible to prevent theft and loss by introducing more robust safety measures which can tackle these issues at source."