On 4 July 2023, the Danish Financial Supervisory Authority made a decision that Saxo Bank A/S’ trading in crypto assets for its own account is found “to lie outside the legal business area of financial institutions, including section 24 of the Financial Business Act.”
On this basis, Saxo Bank is ordered “to dispose of its own holdings of crypto assets.”
Saxo Bank A/S offers its customers “the opportunity to trade with a number of crypto asset products through the bank’s platform.”
On the one hand, ETFs (exchange traded funds) and ETNs (Exchange traded notes) are offered, “which follow the development of cryptoassets, and on the other hand it is possible to speculate on cryptoassets, which are marketed under the term “cryptocurrency cross”.”
In addition, Saxo Bank A/S itself has “a portfolio of cryptoassets, which are held as a hedge to offset the market risk associated with the bank’s cryptoasset products.”
Annex 1 of the Financial Business Act is “an exhaustive list of activities which are clearly covered by the legal business area of financial institutions.”
Trading in crypto-assets does “not appear in Annex 1 of the “Financial Business Act.
The regulation on markets for cryptoassets (MiCA) will only “take effect in its entirety from 30 December 2024.”
The regulation’s amendment to CRD, Annex I, “will for example only have effect from 30 December 2024, cf. Article 146 of the MICA regulation.” The area thus “remains unregulated for the time being.”
Unregulated trading in crypto-assets can “create distrust in the financial system, and the Danish FSA considers that it would be unfounded to legitimize trading in crypto-assets.”
The activity is therefore also “not found to be acceptable as ancillary bank business for reasons of financial stability, cf. section 24 of the Financial Business Act.”
Saxo Bank A/S’ trading in crypto assets “for its own account has taken place in order to cover risks in connection with the offering of other financial products.”
However, this does not change the fact “that the activity, in itself, is not permitted for Danish financial institutions in accordance with § 7, subsection 1, in the Financial Business Act.”
Based on the above, Saxo Bank’s trading of crypto assets for its own account is “found to be outside the legal business area of financial institutions, including section 24 of the Financial Business Act.”
On this basis, Saxo Bank is “ordered to dispose of its own holdings of crypto assets.”
