The Danish Financial Supervisory Authority has issued a directive to Saxo Bank A/S, ruling that its trading activities involving crypto-assets fall outside the recognized legal business area for financial institutions. This decision mandates Saxo Bank to dispose of its existing holdings of crypto assets.
Saxo Bank has been facilitating its customers with opportunities to trade various crypto asset products, including ETFs and ETNs. To hedge the market risk associated with these crypto products, the bank has maintained a portfolio of crypto assets.
However, the regulatory body, after its assessment, has concluded that trading in crypto assets is not encapsulated in Annex 1 of the Financial Business Act. This annex provides a detailed account of activities that are under the legal business purview of financial institutions.
While the regulation on markets for crypto assets (MiCA) is due to come into effect on December 30, 2024, the financial authority’s current decision stems from the belief that unregulated trading in crypto assets can breed distrust in the financial system.
For preserving financial stability, the authority asserts that crypto asset trading should not be accepted as an ancillary bank business.
This directive signifies a significant shift in the regulatory landscape for crypto asset trading among financial institutions in Denmark and potentially sets a precedent for other jurisdictions to follow.