Saxo Bank directed to liquidate crypto assets by Danish financial watchdog.

Denmark’s Financial Supervisory Authority (FSA) has instructed Saxo Bank, a multi-asset broker based in Copenhagen, to sell off its cryptocurrency holdings.

The FSA stated that the bank’s trading of crypto assets for its own account falls outside the legal business scope of financial institutions.

“Unregulated trading of crypto assets can undermine trust in the financial system, and the Danish FSA believes that legitimizing trading of crypto assets would be unfounded.”

Saxo Bank, an online trading and investment company, launched a cryptocurrency offering in May 2021 that allows clients to trade Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) against EUR, USD, and JPY from a single margin account without the need for a crypto wallet. Additionally, Saxo already offers various cryptocurrency products, including ETNs and ETFs.

However, after careful evaluation, the regulatory body concluded that trading in digital assets is not listed in Annex 1 of the Financial Business Act.

Saxo Bank has “limited” cryptocurrency holdings, and the FSA’s instructions will have a “very small impact” on the bank, according to Saxo Bank spokesperson Lasse Lilholt.

Saxo Bank will thoroughly examine the FSA’s decision to determine how to proceed.

The financial watchdog mentioned that the European Union’s crypto regulation – markets in cryptoassets (MiCA) – will come into effect on December 30, 2024, and until then, engaging in crypto trading remains unregulated.

Denmark’s Crypto Status

The Danish financial regulator states that cryptocurrencies used for payments are typically unregulated. However, laws apply to ICOs depending on their characteristics.

For example, an ICO must demonstrate that the token provides investors with voting rights or decision-making power over company profits in order to determine if it is subject to financial regulation.

This is because the FSA is not authorized to regulate tokens with such characteristics.

As a member of the European Union, Denmark actively combats money laundering. The EU’s anti-money laundering (AML) regulations are technologically neutral and apply to cryptocurrencies as well.

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