Today Denmark’s Financial Supervisory Authority (Danish FSA) instructed Saxo Bank to sell all cryptocurrency it holds on its own account.
The Danish bank provides services to clients including the ability to invest in crypto exchange traded funds (ETFs) and notes (ETNs). It also enables direct crypto trading by clients which it refers to as ‘Crypto FX’. To support this it holds crypto on its own account as a hedge, and it is here that the regulator gave a direct instruction to sell its holdings.
Based on local laws, the FSA said “Saxo Bank’s trading in crypto assets for its own account is found to be outside the legal business area offinancial institutions.”
The FSA did not directly instruct the bank to stop the client activities but stated that “unregulated trading in crypto-assets can create distrust in the financial system, and the Danish FSA considers that it would be unfounded to legitimize trading in crypto-assets.” It said it undermines stability under the Financial Business Act.
However, it observed that trading crypto is only unregulated until the end of 2024 when the EU’s Markets for Cryptoassets (MiCA) Regulations come into force.
Just last week Saxo Bank was designated by the FSA as a systemically important financial institution.
At an international level, the Basel Committee has introduced rules for banks that hold crypto-assets, making it relatively unattractive to hold cryptocurrencies compared to tokenized securities.
Meanwhile, the Danish regulator has embraced another blockchain law, the EU’s DLT Pilot Regime. Six months before the law came into force as part of its sandbox FT Lab, it started exploring a consortium led by Deon Digital for using a blockchain based system for tokenized green bonds. The EU law provides some limited exemptions to existing securities laws.
