Kroo Bank, a London-based digital bank, has prohibited its customers from conducting cryptocurrency transactions due to rising fraud cases and scams. The decision, effective from May 30, 2024, aims to protect customers from fraudsters who exploit digital assets to deceive unsuspecting individuals.

Kroo's move is not unique, as other challenger banks, such as Chase UK and Starlink, have implemented similar bans on crypto transactions. This collective decision by banks reflects their growing concern over the increasing prevalence of crypto fraud in the banking sector.

The bank's updated terms and conditions outline the new directive, stating that the restrictions are in place to safeguard customers' accounts and money. Kroo has made it clear that they will no longer support bank transfers or card transactions associated with cryptocurrencies.

Banks have been warning about a surge in online fraud, with Lloyds reporting a 23% increase in cryptocurrency scams compared to the previous year. The Financial Conduct Authority (FCA) has also cautioned the market about the risks of investing in cryptocurrencies and the potential for being scammed.

Despite the ban, Kroo has been making headlines for its attractive current account offering, which boasts an interest rate of 4.35%. The bank has successfully attracted an estimated 150,000 clients within the first year of launching its current account product.

In 2023, Kroo raised £2 million from investors through a crowdfunded capital raising, valuing the bank at £120 million pre-money. According to Crunchbase, the bank has raised a total of $74 million in funding.

While the ban on cryptocurrency transactions may hinder the adoption of cryptocurrencies, it could also lead to a reduction in fraudulent activities within the crypto market, resulting in a more secure ecosystem. Kroo's decision is expected to influence other UK-based fintech companies, reshaping the financial landscape and the broader tech space.