The Danish Financial Supervisory Authority (FSA) has taken a stringent stand on Saxo Bank, a multi-asset broker, instructing it to eliminate its cryptocurrency holdings. In a recent release, the FSA declared that the bank’s cryptocurrency trade was situated “beyond the lawful commerce sphere of financial providers”. This sweeping statement underscores the firm belief the FSA holds that unregulated trading in digital assets could incite mistrust in the finance realm. The FSA fears that it might inadvertently affix a seal of legitimacy to digital asset trade.
May 2021 saw Saxo Bank’s foray into the cryptocurrency world when it introduced its crypto offering that facilitated clients to trade in Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). This move allowed clients to deal with cryptocurrencies directly against EUR, USD, and JPY from a unified margin account, effectively side-stepping the need for maintaining a separate crypto wallet.
Despite this strategic move, the FSA remained unconvinced, pointing out that digital asset trading does not conform to the guidelines stipulated in Annex 1 of the Financial Business Act. In fact, the FSA’s directive will only marginally impact the bank given that its cryptocurrency holdings are rather limited according to Lasse Lilholt, a spokesperson for Saxo Bank, who was quoted by Bloomberg as saying that the bank would carefully review the FSA’s decision.
Interestingly, Denmark’s stance on digital currencies is that they mostly remain non-regulated when employed for payments. However, Initial Coin Offerings (ICOs) do come under certain regulations depending on their inherent characteristics. Any ICO demonstrating qualities such as providing investors with voting rights or decision-making power over company profits would most likely be considered subject to financial regulation. The FSA asserts that it lacks the authority to oversee tokens with these features.
As an active member of the European Union, Denmark is fervently committed to mitigating money laundering activities, treating EU’s anti-money laundering (AML) rules as applicable equally to cryptocurrencies given their technologically neutral nature. As for the future, the EU’s crypto regulation, called markets in cryptoassets (MiCA), is slated to be enforced from December 30, 2024, with crypto trading continuing to remain unregulated till then. Thus, the ongoing stand-off between the Danish FSA and Saxo Bank outlines the thin line between regulatory caution and overbearing control in the crypto world.
Source: Cryptonews
