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 crypto assets as a way to mitigate trading risks.
The Danish Financial Supervisory Authority (DFSA) issued an official directive on July 4, ordering Saxo Bank, a prominent investment bank in Denmark, to liquidate its existing cryptocurrency holdings.
Strengthening regulations
Denmark’s financial regulators have stepped up their efforts to Strengthening regulations in the cryptocurrency industry by cracking down on cryptocurrency service providers, with a particular focus on banning local banks from holding crypto assets as a risk management strategy.
In a crucial move, the Danish Financial Supervisory Authority (DFSA) issued an official directive on July 4, ordering Saxo Bank, a well-known investment bank in Denmark, to liquidate its existing cryptocurrency holdings in accordance with the new regulations.
Denmark’s Financial Supervisory Authority (DFSA) has raised concerns about Saxo Bank’s provision of cryptocurrency trading options, funds and cryptocurrency-related exchange-traded notes to its clients. However, the DFSA’s recent order does not oblige the bank to stop these services.
The full implementation of the markets in the Crypto Assets Regulation (MiCA) will be delayed until December 30, 2024, as stated in Article 146 of the regulation. Also, the amendment to the Capital Requirements Directive (CRD), Appendix I, will not go into effect until the same date. Thus, the crypto-asset market will continue to operate without comprehensive regulations for the time being, as the industry remains unregulated until the specified deadline.
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In response, Saxo Bank announced its compliance with the DFSA’s order, stating that its cryptocurrency holdings are minimal and primarily serve as a hedge against risk. While Denmark deals with crypto-related activities, the regulatory approach continues on a case-by-case basis, similar to many other countries.
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This comes just a few months after Denmark’s Supreme Court issued two landmark rulings confirming that profits from the sale of cryptocurrencies, including bitcoin (BTC), are taxable. The rulings, announced on Thursday, support lower court decisions in cases against the Danish tax ministry.
The cases involved various aspects of cryptocurrency, such as purchases, payments, and income from bitcoin mining. With these rulings, Denmark’s highest court has clarified the taxable nature of crypto winnings under the country’s current laws.
The actions by Danish financial regulators, including a directive for Saxo Bank to divest its cryptocurrency holdings and tax rulings in court, mark a tightening of regulations in the cryptocurrency sector and come at a time when much of the world is doing the same.