The Financial Supervisory Authority (FSA) of Denmark has demanded that the Investment Bank Saxo dispose of its cryptocurrency holdings. Meanwhile, the FSA statement cited Section 24 of Denmark’s Financial Business Act, which states that Saxo Bank’s crypto activity “lies outside of the legal business area of financial institutions.”
As per the statement, the Danish FSA believes that legalizing the trading of crypto-assets would be absurd because it could lead to investor mistrust in the financial system. In addition, the FSA also ruled out any Danish financial institutions engaging in crypto trading until there is more clarity on this matter:
Saxo Bank’s trading with crypto assets for its own account has been done to hedge risks associated with the offering of other financial products. However, this does not change the fact that the activity itself is not allowed for Danish financial institutions.
Saxo Bank’s crypto trading is currently unregulated because the Markets in Crypto-Assets (MiCA), the European Union’s regulatory body for cryptocurrencies, will not be effective until December 30, 2024.
According to Bloomberg, Lasse Lilholt, a spokesman for Saxo Bank, stated that the bank will thoroughly read and respond to the FSA decision. She also added that Saxo has limited holdings of crypto assets, and the vast majority of this risk is reduced by using exchange-traded and cleared products. Therefore, it wouldn’t pose any kind of threat or even have an impact on the bank itself.
Meanwhile, Saxo Bank made its way into the crypto market back in 2021 with a limited number of assets like Bitcoin, Ethereum, and Litecoin, which can be traded against fiat currencies like the Euro, Yen, and U.S. Dollars.
As crypto regulation rules lack clarity, financial regulators around the world have expressed similar concerns. In this context, Japan’s FSA had also issued warnings to Bybit, MEXC Global, Bitforex, and Bitget to register if they wanted to continue operating as cryptocurrency exchanges.