Key Points
- DFSA has asked Saxo Bank to liquidate its crypto holdings citing risky investment
- The process is expected to have a “very limited impact” on the bank’s functionality.
Denmark has asked one of its largest banks, Saxo Bank, to erase its cryptocurrency holdings as a de-risking effort. It expects the bank not to be impacted in any way while closing its crypto market positions.
No more crypto investments Saxo Bank: Denmark
The developments come at a time when regulators in Denmark seek to go after crypto services providers citing investment risks. It has declared that all local banks cannot hold any crypto assets to hedge against trading risks.
The Danish Financial Supervisory Authority (DFSA) announced on July 4 orders for Saxo Bank to dispose of its crypto holdings under claims that such assets lie outside the legal business of financial institutions in Denmark per section 24 of Denmark’s Financial Business Act.
DFSA explained that Saxo Bank has exposed itself and its customers to trading risks by bridging them to the crypto markets. It also said that apart from direct crypto assets, exchange-traded funds and exchange-traded notes tied to crypto assets should be included in the disposal list as it is possible to speculate on the crypto market.
The regulator also cited Annex 1 of the Financial Business Act, saying that financial institutions should not publicly trade crypto assets in the country. An excerpt from the announcement reads:
“Based on the above, Saxo Bank’s trading in crypto assets for its account is outside the legal business area of financial institutions. On this basis, Saxo Bank is ordered to dispose of its holdings of crypto assets.”
The regulator also mentioned the preparedness of Denmark to onboard European Union’s Markets in Crypto Assets (MiCA) legislation saying that they will hit the set dates to effect it in 2024. MiCA is expected to be enforced in all EU member states starting December 2024 after the bloc’s parliament passed it in June. However, more steps will be required between now and its enforced date.
So keep watching Fintech Express for more updates on this and other fintech-related developments.