Effective May 30, 2024, U.K.-based digital bank Kroo will enforce a prohibition on cryptocurrency transactions for its clientele. This strategic decision is a proactive response to the rising instances of online fraud and deceptive practices surrounding the use of cryptocurrencies.

Kroo, headquartered in London, has announced the discontinuation of cryptocurrency transactions by its customers as a precautionary measure against the escalating cyber fraud and fraudulent activities linked to the digital currency market.

Per the stipulations mentioned in the bank's terms and conditions, Kroo will impose restrictions on accounts engaging in cryptocurrency purchase, trading, or receiving deposits stemming from cryptocurrency transactions. Transactions associated with cryptocurrencies will be declined, and persistent engagement in such activities may lead to the closure of the account.

Additionally, Kroo reserves the right to freeze accounts suspected of involvement in cryptocurrency-related operations, further solidifying its policy against digital currency use.

Effective from May 30, 2024, Kroo will cease supporting bank transfers and card transactions associated with cryptocurrencies, aligning with its role as a challenger bank competing with established financial institutions in the U.K. This decision mirrors the actions of other U.K. challenger banks like Starling Bank and Chase UK, which have also enforced restrictions on cryptocurrency use.

Banking Industry Alerts on Crypto Fraud

Amidst concerns raised by numerous global banks, there is a growing sentiment that cryptocurrencies pose greater security risks than commonly believed. Several financial institutions argue that digital currencies do not offer the level of anonymity often assumed by users.

In a recent disclosure by the Central Bank of Russia in February, it was revealed that nearly half of the financial fraud schemes identified within the country in 2023 involved the use of cryptocurrencies and foreign currencies in illicit transactions. This disclosure highlights the vulnerabilities of the financial system to fraudulent activities facilitated by digital currencies.

Similarly, officials from the Federal Reserve Bank in the United States have emphasized the risks of fraud and scams associated with the integration of cryptocurrencies and Central Bank Digital Currencies (CBDCs) in banking operations. Stressing the importance of caution, the Federal Reserve Bank of Atlanta has emphasized the need for vigilance in addressing the risks posed by the inclusion of digital assets in the banking sector.