The latest guidance issued by the Danish Financial Supervisory Authority (FSA) linked to decentralized finance (DeFi) regulations has raised major concerns for the crypto community. The directions try to grab everything in crypto regulation, including your Bitcoin wallet, using the “interface” argument.
What do Danish rules say?
Crypto expert revealed that the DFSA says that interface providers must be regulated. This also includes Bitcoin wallets, mobile app developers, and more. The broad interpretation implies that any interface used while doing crypto transactions must be regulated involving web browsers to decentralized exchange (DEX) interfaces
However, this approach contradicts the intent of the European Union’s Markets in Crypto Assets (MiCA) regulation. The set of crypto rules looks to provide a balanced regulatory framework for the crypto industry.
Meanwhile, the Danish FSA’s guidance seems to be influenced by the Financial Action Task Force’s (FATF) aggressive stance. Its stance has suggested that all crypto linked interfaces need to be regulated.
If this is being enforced then the guidance would mean that service providers offering Bitcoin wallets, DEX interfaces, or any token-related services to Danish users would need to undergo regulatory approval in Denmark.
It is important to note that banning peer to peer or “unhosted wallets” was earlier proposed by some far-left and far-right MEPs during the preparation of MiCA. However, there are clear political forces in the EU that want to copy the Chinese model.
More slide to come?
On the market side, Bitcoin (BTC) price dropped by around 6% in the last 7 days. The recent increase in the selling pressure led the biggest crypto asset to drop below the $60,000 price level. Bitcoin is trading at an average price of $61,460, at the press time.
The cumulative crypto market cap surged marginally over the last day to stand at $2.26 trillion. The 24 hour trading volume is down by 27% to stand at $62 billion.
Expert highlighted that there is also confusion among crypto asset service providers in the EU regarding the correct deadlines. This is linked to the sustainability disclosures mandated by MiCA.
MiCA includes requirements for crypto issuers and service providers to make sustainability disclosures. Asset referenced tokens (ARTs) and electronic money tokens (EMTs) are needed to make such disclosures from June 30, 2024. While all crypto asset service providers must start by the end of 2024.
It will be crucial to see what would be the next move taken by the authority.
