Saxo Bank Asked To Stop Crypto-Related Activities By Danish Regulator
Key Points:
As a result, this activity is not acceptable as an auxiliary banking company for financial stability considerations (see section 24 of the Financial Services Act). Moreover, Saxo Bank maintains a portfolio of cryptoassets as a hedging mechanism to counter the market risk linked with the bank’s cryptoasset products. Saxo Bank was obliged to sell its own crypto assets on this grounds.
The new laws governing crypto markets will not go into effect until the end of 2024, thus, the sector will remain uncontrolled for the time being, according to the FSA.
“Unregulated trading in cryptoassets can create distrust in the financial system, and the Danish FSA believes it would be unfounded to legitimize trading in cryptoassets,” the agency stated.
Saxo Bank provides its clients with the ability to trade a variety of crypto asset products through the bank’s platform. On the one hand, there are ETFs (Exchange Traded Funds) and ETNs (Exchange Traded Notes) that track the growth of cryptoassets, while on the other, it is possible to bet on cryptoassets, which are advertised as “cryptocurrency cross.”
The Copenhagen-based bank is under increased regulatory scrutiny after being designated as a systemically significant financial institution for the first time last month.
The legislation on cryptoasset markets (MiCA) will not be fully implemented until December 30, 2024. Unregulated trade in crypto-assets might cause mistrust in the financial system, and the Danish FSA believes that legitimizing trading in crypto-assets would be unwarranted. As a result, the activity is deemed unsuitable for supplementary bank operations on grounds of financial stability.
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