Denmark is causing significant ripples in the cryptocurrency sphere as its financial regulatory authority has instructed Saxo Bank to divest its cryptocurrency holdings. This action is a response to existing regulations that prohibit banks from engaging in proprietary trading and has prompted the regulatory authority to step in.
Earlier today, the Danish financial supervisory authority issued a statement indicating that Saxo Bank held its own digital assets as a safeguard against market risks. However, the regulatory body emphasized that engaging in such trading activities falls outside the authorized scope of business operations for financial institutions in Denmark. Saxo Bank actively provides a platform for customers to participate in cryptocurrency trading.
The statement further explained, “Saxo Bank A/S’ trading in crypto assets for its own account has been conducted to mitigate risks associated with the offering of other financial products. Nevertheless, this does not alter the fact that the activity itself is not permitted for Danish financial institutions, in accordance with § 7, subsection 1, of the Financial Business Act.”
Denmark’s Approach to MiCA Raises Concerns
Denmark’s financial regulatory authority has acknowledged that the current activity in question remains unregulated. This is primarily because the European Union’s crypto regulation, known as the Markets in Crypto Assets Regulation (MiCA), is set to come into effect on December 30, 2024.
In a statement, the regulatory authority expressed concerns about unregulated trading in crypto assets, citing its potential to undermine trust in the financial system. They deemed it unjustifiable to legitimize such trading and stated that it is not considered an acceptable ancillary bank business in terms of financial stability, as outlined in section 24 of the Financial Business Act.
More recently, the Denmark Supreme Court has ruled to impose taxes on profits generated from Bitcoin. Individuals and entities, including investors and miners, who earn profits from Bitcoin sales will be required to adhere to taxation regulations within the country. This demonstrates that Denmark, like other nations, is closely monitoring the industry.