The bank cited the increasing use of cryptocurrencies by fraudsters to scam individuals as the reason behind its decision. Kroo is joining other challenger banks, such as Starling Bank and Chase UK, in implementing crypto transaction bans. Starling Bank no longer supports crypto transactions, and Chase UK, part of JP Morgan, blocked UK customers from purchasing crypto assets last year according to tech.eu.
In its updated Terms & Conditions, Kroo specified that starting from 30 May 2024, it will no longer support bank transfers or card transactions associated with cryptocurrencies. The bank will decline payments to cryptocurrency asset providers and will not process bank transfers from senders related to cryptocurrency assets.
This move follows a broader trend among banks to address the rise in online fraud. Specifically, Lloyds reported a 23% increase in cryptocurrency scams in 2023 compared to the previous year. Additionally, the Financial Conduct Authority (FCA) has cautioned against the risks of investing in cryptocurrencies and the potential for scams.
Kroo raised GBP 2 million through a crowdfunded capital-raising effort, valuing it at GBP 120 million pre-money. According to Crunchbase, Kroo has raised a total of USD 74 million to date. Kroo, which launched a current account product in December 2022 offering a 4.35% interest rate, has attracted approximately 150,000 customers within its first year according to tech.eu. This particular launch, dubbed the ‘2&2 model’, was aimed at Gen Z and millennials. It offered 2% AER on deposits up to GBP 85,000, and the challenger also announced its intention to plant two trees for every new customer that opens a current account.
In August 2021, Kroo took the stage when it announced the closing of its Series A funding round, where it raised GBP 17.7 million. Soon after, the neobank received a UK banking licence with restrictions from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Furthermore, in July 2022, Kroo partnered with ClearBank to provide access to all UK payment schemes as well as accounts for its operational funds.
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