The FSA said cryptocurrency trading activities will remain unregulated until MiCA is implemented in 2024.
The Danish Financial Supervisory Authority (FSA) has ordered investment bank Saxo to divest its cryptocurrency assets as financial institutions in the country are prohibited from engaging in cryptocurrency trading activities, according to a statement on July 5.
“On July 4, 2023, the Danish Financial Supervisory Authority ruled that Saxo Bank’s trading in crypto assets for its own accounts did not fall within the lawful scope of business of a financial institution, including within the meaning of Section 24 of the Financial Business Act”.
The FSA noted that while Saxo’s holdings of cryptocurrencies are used to hedge market risks associated with its crypto-related products, the Financial Business Act does not include cryptocurrency trading in the legitimate business scope of financial institutions.
“Saxo Bank trades crypto assets for its own accounts in order to avoid the risks associated with offering other financial products. However, this does not change the fact that such activities are not permitted for Danish financial institutions according to Section 7 (1) of the Financial Business Act.”
The bank’s “unregulated crypto-asset trading could create distrust in the financial system and the Danish Financial Services Authority considers that there is no basis for legalizing crypto-asset trading,” the authority said.
The FSA further noted that cryptocurrency trading activities currently “remain unregulated” until the EU’s Markets in Crypto-Assets (MiCA) regulation is implemented in December 2024.
MiCA is a landmark piece of crypto legislation unanimously adopted by the European Union on May 16, which aims to provide a regulatory framework for crypto assets to ensure European financial stability and consumer protection.
Meanwhile, Denmark has introduced a cryptocurrency profit tax within its jurisdiction in line with tightening regulations. The country’s Supreme Court ruled in two cases in March that gains from Bitcoin (BTC) sales are taxable.