Danish Regulator Orders Saxo Bank to Divest Crypto Holdings
The Financial Supervisory Authority (FSA) of Denmark has issued an order to investment bank Saxo Bank, instructing it to divest its cryptocurrency holdings. The decision is based on the prohibition of financial institutions in the country from engaging in crypto trading activities, as stated in a press release on July 5. The Danish FSA declared that Saxo Bank's trading of crypto assets for its own account falls outside the legal scope of financial institutions, including Section 24 of the Financial Business Act. Although Saxo Bank claimed that its crypto holdings were used for hedging market risks associated with its crypto-related products, the Financial Business Act does not recognize cryptocurrency trading as a legitimate business area for financial institutions. The FSA highlighted that Saxo Bank's unregulated trading in crypto assets can undermine trust in the financial system. Therefore, the Danish FSA believes it would be unjustified to legitimize trading in cryptocurrencies. Until the implementation of the European Union's Markets in Crypto Assets (MiCA) regulations in December 2024, crypto trading activities will remain unregulated. MiCA is a significant crypto legislation passed unanimously by the European Union on May 16, aiming to establish a regulatory framework for crypto assets to ensure financial stability and consumer protection within Europe. In line with Denmark's tightening regulatory stance, the country has also introduced a crypto capital gains tax. In March, the Supreme Court of Denmark ruled that profits from Bitcoin (BTC) sales are subject to taxation in specific cases. Saxo Bank will now need to comply with the FSA's order and divest its crypto holdings. This development reflects the increasing scrutiny and regulatory measures imposed on financial institutions regarding their involvement with cryptocurrencies.