Denmark's financial watchdog has issued a directive ordering Saxo Bank, a Copenhagen-based financial institution, to divest itself of any holdings of cryptoassets. The Danish Financial Supervisory Authority (FSA) stated that current regulations prohibit banks from engaging in proprietary trading, including holding cryptocurrencies.
Although Saxo Bank offers a platform for customers to trade cryptocurrencies, it also holds its own cryptoassets as a hedge against market risk. However, the FSA emphasized that such trading activities are not among the authorized business activities for financial institutions in Denmark.
This move comes at a time when Saxo Bank is facing heightened regulatory scrutiny, having been named a systematically important financial institution for the first time recently. The bank has yet to comment on the FSA's directive.
The FSA also stressed that the regulatory framework for cryptocurrencies will not come into full effect until the end of 2024, implying that the sector remains unregulated for the time being. The authority highlighted concerns about the potential for unregulated trading in cryptoassets to undermine trust in the financial system. Consequently, it believes it would be unjustified to legitimize trading in cryptocurrencies.
Saxo Bank, like other financial institutions, will need to comply with the FSA's directive and dispose of its crypto holdings, aligning its operations with existing regulations. This decision further underscores the ongoing efforts of regulators to establish robust frameworks to monitor and manage the risks associated with cryptocurrencies.