Denmark’s Financial Supervisory Authority (FSA) has issued an order for investment bank Saxo to divest its cryptocurrency holdings due to the prohibition of crypto trading activities for financial institutions in the country, as stated in a press release on July 5. The FSA’s decision was based on the Danish Financial Supervisory Authority’s determination that Saxo Bank A/S’ trading in crypto assets for its own account falls outside the legal scope of financial institutions, including section 24 of the Financial Business Act.
The FSA acknowledged that Saxo’s cryptocurrency holdings were utilized as a means to hedge market risks associated with its crypto-related products. However, the Financial Business Act does not permit cryptocurrency trading as a legitimate business area for financial institutions.
The FSA emphasized that Saxo Bank A/S’ trading in crypto assets for its own account was solely intended to mitigate risks connected to the offering of other financial products. Nevertheless, this activity remains unauthorized for Danish financial institutions, according to section 7, subsection 1, of the Financial Business Act. The FSA expressed concerns that the unregulated trading of crypto assets by the bank could erode trust in the financial system and deemed it unwarranted to legitimize such trading.
The FSA also noted that until the implementation of the Markets in Crypto Assets (MiCA) regulations by the European Union in December 2024, crypto trading activities will remain unregulated. MiCA is a significant crypto legislation unanimously passed by the European Union on May 16. It aims to establish a regulatory framework for crypto assets, ensuring financial stability and consumer protection across Europe.
In parallel with Denmark’s regulatory tightening, the country has introduced a cryptocurrency capital gains tax. In March, the Supreme Court of Denmark ruled that profits derived from the sale of Bitcoin (BTC) are subject to taxation in two specific cases.