Denmark Orders Saxo Bank to Dump Crypto Holdings

Denmark’s financial regulator has ordered Saxo Bank to dispose of its cryptocurrency holdings, saying that the bank’s trading in the asset class lies outside the legal business area of ​​financial institutions, citing section 24 of the Financial Business Act.

Saxo Bank Ordered to Scrap Crypto Holdings

According to a statement from the Danish Financial Supervisory Authority (FSA), Saxo Bank allows customers to trade several crypto assets on its platform. The bank also offers a variety of crypto-linked exchange-traded funds (ETF) and exchange-traded notes (ETNs), the regulator said, adding that “it is possible to speculate on crypto assets.”

The FSA also mentioned that the bank has its own portfolio of crypto assets, which are held as a hedge to offset the market risk associated with the bank’s crypto asset products.

Citing Annex 1 of the Financial Business Act, the FSA stated that trading in crypto assets does not appear to be under the lawful business scope of Danish financial institutions.

“Based on the above, Saxo Bank’s trading in crypto assets for its own account is found to be outside the legal business area of financial institutions. On this basis, Saxo Bank is ordered to dispose of its own holdings of crypto assets,” the regulator stated.

FSA: Crypto Remains Unregulated in Europe 

The FSA also mentioned the EU-wide crypto regulation, Markets in Crypto Assets (MiCA). It stated that with the regulation still expected to come into effect by Dec. 30, 2024, cryptocurrency remains unregulated in the region.

“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. The activity is therefore also not found to be acceptable as ancillary bank business for reasons of financial stability, cf. section 24 of the Financial Business Act,” the FSA said.

Meanwhile, in its response to the latest order, Saxo Bank stated the decision would have minimal impact on its operations and that customers would not experience significant adjustments. The bank also stated that the order won’t make it halt its crypto offering.