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Saxo Bank obliged to get rid of crypto holdings by Danish authorities

News
Saxo Bank obliged to get rid of crypto holdings by Danish authorities

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.

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. 

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. 

The Danish Financial Supervisory Authority (DFSA) has raised concerns regarding Saxo Bank’s provision of cryptocurrency trading options and crypto-linked exchange-traded funds and notes to its customers. 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 the time being, as the industry remains unregulated until the specified deadline.

In response, Saxo Bank has stated its compliance with the DFSA’s order, noting that its cryptocurrency holdings are minimal and primarily serve as risk hedges. As Denmark tackles crypto-related activities, the regulatory approach continues to be conducted on a case-by-case basis, similar to several other countries.

Alongside MiCa

This comes just a few months after Denmark’s Supreme Court has delivered two significant rulings affirming that profits derived from the sale of cryptocurrencies, including bitcoin (BTC), are subject to taxation. The verdicts, announced on Thursday, uphold the decisions made by lower courts in lawsuits filed against the Danish Ministry of Taxation. 

The cases involved various aspects of cryptocurrencies, such as purchases, payments, and income from bitcoin mining. With these rulings, Denmark’s highest court has clarified the taxable nature of crypto gains under the country’s existing laws.

The actions taken by Danish financial regulators, including the directive for Saxo Bank to divest its cryptocurrency holdings and the rulings of taxes in court, represent a tightening of regulations in the cryptocurrency sector and come at a time when much of the world is doing the same.