Danish Financial Regulators Order Saxo Bank to Divest Crypto Holdings

6. July 2023 admin 0 Comments

• Danish financial regulators have issued an official directive to Saxo Bank, requiring the bank to divest its cryptocurrency holdings.
• The Markets in Crypto-Assets Regulation (MiCA) and the amendment to the Capital Requirements Directive (CRD) will only come into effect at the end of 2024.
• Saxo Bank has stated that its cryptocurrency holdings are minimal and primarily serve as risk hedges.

Tightening Regulations in Cryptocurrency Sector

In a move aimed at tightening regulations in the cryptocurrency sector, Danish financial regulators have taken action against cryptocurrency service providers, specifically targeting local banks from holding cryptocurrency assets as a means of mitigating trading risks.

DFSA’s Official Directive

The Danish Financial Supervisory Authority (DFSA) issued an official directive on July 4, instructing Saxo Bank, a prominent investment bank in Denmark, to divest its existing holdings in cryptocurrencies. Strengthening regulations Denmark’s financial regulators have intensified their efforts to strengthen regulations in the cryptocurrency industry by cracking down on cryptocurrency service providers, with a specific focus on prohibiting local banks from holding cryptocurrency assets as a risk management strategy.

Delayed Implementation of MiCA & CRD

Taking a decisive step, the Danish Financial Supervisory Authority (DFSA) issued an official directive on July 4, commanding Saxo Bank, a well-known investment bank in Denmark, to liquidate its current cryptocurrency holdings in compliance with the new regulations. However, the DFSA’s recent order does not mandate the bank to discontinue these services. The full implementation of the Markets in Crypto-Assets Regulation (MiCA) will be delayed until December 30, 2024, as stated in Article 146 of the regulation. The amendment to the Capital Requirements Directive (CRD), Annex I, will also only come into effect on the same date. Consequently, the crypto asset market will continue to operate without comprehensive regulations for some time being.

Saxo Bank’s Compliance

In response Saxo Bank has stated its compliance with DFSA’s order noting that its cryptocurrency holdings are minimal and primarily serve as risk hedges.

Conclusion

As Denmark tackles crypto-related activities regulatory approaches continue to be conducted on case by case basis similar to several other countries across Europe and beyond .