Cryptocurrency trading activities will remain unregulated until MiCA is implemented in 2024, the FSA said.
The Danish Financial Supervisory Authority (FSA) ordered investment bank Saxo to divest its cryptocurrency assets after financial institutions in the country were banned from trading cryptocurrencies, according to a July 5 statement.
“On July 4, 2023, the Danish Financial Supervisory Authority ruled that Saxo Bank’s trading of encrypted assets for its own account did not fall within the legitimate business scope of financial institutions, including section 24 of the Financial Business Act”.
The FSA pointed out that while the cryptocurrencies held by Saxo are used to hedge the market risks associated with its crypto-related products, the Financial Business Act does not include cryptocurrency trading as a legitimate business area of financial institutions.
“Saxo Bank conducts encrypted asset transactions for its own account in order to avoid the risks associated with the provision of other financial products. However, this does not change the fact that Danish financial Institutions do not allow such activities."
The authority said the bank’s “unregulated trading of crypto-assets could create distrust in the financial system and the Danish Financial Services Authority considers the legalization of crypto-asset trading to be unwarranted.”
The FSA further noted that cryptocurrency trading activities currently “remain unregulated” until December 2024, when the EU’s Market in Cryptoassets (MiCA) regulation is implemented.
MiCA is a landmark piece of crypto legislation unanimously adopted by the European Union on May 16 to provide a regulatory framework for crypto assets to ensure financial stability and consumer protection in Europe.
Meanwhile, in line with tightening regulations in Denmark, the country has introduced a cryptocurrency profits tax within its jurisdiction. The country’s Supreme Court ruled in two cases in March that proceeds from Bitcoin (BTC) sales are taxable.
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