Denmark’s Financial Supervisory Authority (FSA) has issued an order to Saxo Bank, a leading online trading and investment institution, demanding the divestment of its cryptocurrency holdings. The FSA’s statement, released on Wednesday, highlighted that Saxo Bank’s trading activities involving digital assets for its own accounts are not within the bank’s legally authorised scope of operations.
Saxo Bank is widely known for its extensive selection of financial offerings, which include online trading opportunities for stocks, bonds, commodities, forex, contracts for difference, fiat currencies, and cryptocurrencies.
The FSA clarified that while Saxo Bank hedges its crypto assets to mitigate market risks associated with its digital asset products, trading in cryptocurrencies is not among the authorized activities listed in Appendix 1 of the Danish Financial Business Act.
The Danish Financial Supervisory Authority has explained that unregulated trading of cryptocurrency can damage the confidence in the financial system and is not considered a valid supplementary banking function in terms of financial stability as stated in Section 24 of the Danish Financial Business Act. Therefore, legitimising such trading is deemed unjustified by the authority.
Additionally, the FSA has highlighted that financial institutions trading in cryptocurrencies are currently unregulated because the European Union’s Markets in Crypto-Assets (MiCA) regulations have been delayed. The full enforcement of MiCA is slated for December 30, 2024.
In response to the decision made by the FSA, Saxo Bank has issued a statement indicating that they will be carefully reviewing the decision to determine their appropriate course of action. The bank has emphasised that their customers are able to gain exposure to cryptocurrencies without actually owning them.
“We maintain a very limited portfolio of cryptocurrencies solely to hedge a marginal proportion of risk associated with facilitating crypto assets. The majority of this exposure is mitigated through exchange-traded and cleared products,” explained the Danish investment bank. Saxo Bank reassured its clients that the FSA’s decision would have minimal impact on its business operations, and they should not expect any significant changes.
