- DFSA has ordered Saxo Bank to dispose of its cryptocurrency holdings.
- Danish financial regulators have said local banks are not allowed to hold cryptocurrencies to hedge trading risks.
- The DFSA order on Saxo Bank’s cryptocurrency holdings will have little impact on the bank’s operations.
Local investment bank Saxo Bank has received a formal order from the Danish Financial Supervisory Authority (DFSA) directing it to dispose of its crypto holdings.
Quoting Article 24 of the Danish Financial Industry Act, Saxo Bank’s cryptocurrency activities “are outside the legal sphere of business of financial institutions,” according to the regulator.
Danish cryptocurrency service provider
Danish financial regulators are going after crypto service providers, saying local banks are not allowed to hold cryptocurrencies as part of their risk management.
DFSA points out exactly why it chose Saxo Bank, claiming that Saxo Bank offers its customers the option to trade various cryptocurrencies on its platform. The regulator said the company also offers a number of exchange-traded funds and listed bonds related to cryptocurrencies, adding that “it is possible to speculate on crypto assets.”
DFSA also noted that Saxo Bank has its own portfolio of bitcoin assets, which is maintained as a hedge against market risks associated with the bank’s cryptocurrency products. Citing Annex 1 of the Financial Industry Act, the regulator said trading in crypto assets does not appear to fall within the legal scope of operations of Danish financial institutions.
Based on the above reasons, DFSA states:
“Based on the above, it is found that the trading of crypto assets in Saxo Bank’s proprietary accounts is outside the statutory scope of the financial institution’s business. “
Considering Saxo Bank’s customers do not own the underlying cryptocurrency, but instead buy financial instruments that follow the price of the cryptocurrency, it will be interesting to see how Saxo Bank proceeds with its crypto offerings. I guess it’s the place.