© Reuters. Denmark orders Saxo Bank to remove cryptocurrencies in its possession
Danish financial regulators rail against cryptocurrency service providers, declaring that local banks are not allowed to hold cryptocurrencies to hedge against trading risks. On July 4, the Danish Financial Supervisory Authority (DFSA) officially ordered the local investment bank Saxo Bank to dispose of its cryptocurrency holdings. The regulator said Saxo Bank’s cryptocurrency business “does not fall within the legal business area of financial institutions”, citing section 24 of the Danish Financial Activities Act.According to the DFSA, Saxo Bank offers its clients the ability to trade a number of cryptocurrencies through its platform. The firm also offers several cryptocurrency-related exchange-traded funds and exchange-traded notes, the regulator points out, adding the ability to “speculate on crypto assets.” Additionally, Saxo Bank has its own portfolio of crypto assets, held as a hedge to offset the market risk associated with the bank’s crypto products, wrote the DFSA. Citing Schedule 1 of the Financial Activities Act, the authority said that trading in crypto assets is not covered by the area of legal activity of financial institutions in Denmark. The DFSA said:
“Based on the above, Saxo Bank’s proprietary trading of crypto assets on its own account appears to be outside the legal business area of financial institutions. Based on this, Saxo Bank is ordered to divest its holdings in crypto assets”.
In the announcement, the DFSA also mentioned the European regulation on crypto asset markets, known as MiCA. The regulator highlighted that the MiCA regulation will only come into force in its entirety from December 2024. “So this is an unregulated area for the moment,” the regulator points out. The FSA’s order does not force Saxo Bank to stop offering cryptocurrencies, Saxo global communications head Lasse Lilholt told Cointelegraph. As customers of Saxo Bank, you do not own the underlying cryptocurrency, but buy a financial product that follows the price of the asset.
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