Denmark’s Regulatory Authority Orders Saxo Bank to Delete Cryptocurrency Holdings

In a move to enforce compliance with regulatory guidelines, Denmark’s financial regulatory authority has directed Saxo Bank, a local investment bank, to divest its cryptocurrency holdings. The Danish Financial Supervisory Authority (DFSA) issued the order, stating that cryptocurrency activities fall outside the legal business area of financial institutions, as specified in Denmark’s Financial Business Act.

The DFSA highlighted that Saxo Bank enables its customers to trade various cryptocurrency products on its platform, including crypto-linked exchange-traded funds and exchange-traded notes. The regulator noted that the bank also holds its own portfolio of cryptocurrencies as a risk hedge for its crypto-related offerings.

Referring to the Financial Business Act, the DFSA emphasized that trading in crypto-assets is not covered by the legal business area of financial institutions in Denmark. As a result, Saxo Bank has been instructed to divest its cryptocurrency holdings. The DFSA acknowledged that the European regulation known as Markets in Crypto Assets (MiCA) will only take full effect in December 2024, leaving the current crypto area unregulated for the time being.

Saxo Bank’s global communications head, Lasse Lilholt, stated that the DFSA’s order does not require the bank to stop offering crypto services. While the bank will carefully review the decision and consider its response, Lilholt clarified that as a Saxo Bank customer, one does not directly own the underlying cryptocurrency but rather purchases a financial product that tracks its price.

Lilholt also mentioned that Saxo Bank holds a limited portfolio of cryptocurrencies primarily for hedging purposes, with most of the exposure mitigated through exchange-traded and cleared products. Therefore, the impact of the DFSA’s decision on the bank’s business is expected to be minimal, and customers will not experience significant changes.

The Danish financial authorities have shown some uncertainty regarding local cryptocurrency regulations. Although cryptocurrencies like Bitcoin are not explicitly classified as financial services in Denmark, the DFSA granted authorization to the Danish crypto startup Januar to operate in 30 European Economic Area markets in April 2023. Additionally, the Supreme Court of Denmark issued two judgments in March, considering the taxable nature of Bitcoin sales under specific circumstances.

For more news, find me on Twitter or subscribe to my YouTube channel.

What is your opinion on this issue? Leave me your comment below! I’m always interested in your opinion!

Leave a Reply

Your email address will not be published. Required fields are marked *

Recommended for you