Key takeaways:
- Saxo Bank has been ordered by the Danish Financial Supervisory Authority (Danish FSA) to liquidate every cryptocurrency it owns.
- The FSA’s decision is aimed at mitigating potential risks associated with cryptocurrencies
In a significant development, the Danish Financial Supervisory Authority (FSA) has directed Saxo Bank, one of Denmark’s leading financial institutions, to cease its cryptocurrency trading activities.
This move by the regulatory body reflects growing concerns surrounding the risks and potential regulatory challenges associated with cryptocurrencies.
The Danish FSA has issued a clear directive to Saxo Bank, instructing the institution to immediately halt its trading activities in cryptocurrencies. The directive specifically applies to the bank’s proprietary trading, meaning the trading activities conducted for its own account rather than on behalf of clients.
The Danish Financial Supervisory Authority (FSA) has stated that Saxo Bank engaged in trading crypto assets for its own account as a means to hedge risks associated with its other financial products.
However, the FSA emphasized that this activity is not permitted for Danish financial institutions.
The FSA further highlighted that the European Union’s regulation on crypto assets, known as the markets in crypto assets (MiCA) regulation, will only become effective from December 30, 2024. Therefore, Saxo Bank’s proprietary trading of cryptocurrencies remains unregulated at present.
The statement also mentioned Saxo Bank’s “very limited portfolio of cryptocurrencies,” which is only held to somewhat offset the risk related to the facilitation of digital assets.
It is noteworthy that Saxo Bank was just recently recognised as a systemically important financial institution by the FSA.
The Basel Committee has established regulations for banks that store crypto assets on a global scale, making the holding of cryptocurrencies less appealing than the holding of tokenized securities.
Referring to Annex 1 of the Financial Business Act, the Danish Financial Supervisory Authority (FSA) has pointed out that the trading of crypto assets is not explicitly included within the defined business scope of financial institutions in Denmark.
Consequently, the FSA has determined that Saxo Bank’s proprietary trading of crypto assets falls outside the legal boundaries of financial institutions. As a result, the FSA has issued an order requiring Saxo Bank to divest its own holdings of crypto assets.
Financial regulatory authorities (FSAs) across the globe are displaying heightened assertiveness in their attempts to regulate the cryptocurrency industry.
For instance, in April, the Financial Services Agency (FSA) of Japan issued warnings to several companies including Binance, Bybit, MEXC Global, and BitForex for engaging in unregistered activities.
