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Denmark’s FSA Orders Saxo Bank to Dump Crypto Holdings
Denmark’s financial markets supervisor has demanded that Saxo Bank dump its cryptocurrency holdings. The Danish Financial Supervisory Authority (FSA) stated this in a statement released today (Wednesday), noting that the multi-asset broker’s trading in digital assets for its own accounts falls outside the investment bank’s “lawful area of activity.”
Danish Watchdog Frowns at Saxo Bank
As a bank that specializes in online trading and investment, Saxo Bank offers a wide range of financial products and services, including online trading in stocks, bonds, commodities, forex, contracts for difference, fiat currencies and cryptocurrencies.
According to the FSA, the Copenhagen-based investment bank hedges its crypto assets to match the market risk associated with its digital asset products. However, the regulator noted that trading in crypto is not part of the supported activities listed in Appendix 1 of the Danish Financial Business Act.
“Unregulated trading of crypto assets can create distrust in the financial system, and the Danish FSA finds that legitimising trading in crypto-assets would be unjustified,” the financial watchdog explained. “Thus, the activity cannot be accepted as an ancillary banking activity for reasons of financial stability, cf. section 24 of the Danish Financial Business Act.”
Furthermore, the regulator pointed out that because the European Union’s recently passed crypto regulation, Markets in Crypto-Assets (MiCA), will only come into enforcement in its entirety on December 30, 2024, crypto trading among financial institutions “remains unregulated for the time being.”
"We naturally take the decision of the Financial Supervisory Authority into account and will read it thoroughly to consider how we otherwise respond to it," Saxo Bank said in a statement shared with Finance Magnates, pointing out that its customers get exposure to cryptocurrencies without owning them.
"With regards to this, we have held a very limited portfolio of cryptocurrencies, solely to hedge a very marginal proportion of risk associated with the facilitation of crypto assets. The vast majority of this exposure is mitigated through exchange-traded and cleared products," the Danish investment bank elaborated. "Therefore, the FSA's decision will have a very limited impact on our business, and our client will not experience any significant changes.”
Saxo Bank’s FX Volume Drops 8% in June
Meanwhile, Saxo Bank on Wednesday released its monthly trading volumes for June 2023, reporting an 8% decline in its forex trading volumes. The volume came in at $119.5 billion, with the daily average falling by 5% to $5.4 billion.
However, compared to the same month last year, the drop in total forex volume in June 2023 is much more significant: the volume went down by 22% from $152.5 billion. Similarly, the daily average volume plummeted by 21% from $6.9 billion.
Since the start of 2022, Saxo Bank’s monthly forex trading volumes have been undulating, finally sinking to $102.8 billion in April, which is the lowest volume since December 2021. However, the volume later picked up, jumping by 27% to $130.5 billion in May, only to drop again last month.
Across all markets, Saxo Bank’s trading volumes weakened by 4% to $391.7 billion, with the monthly volumes from its trading activities in commodities and fixed income slumping by 21% and 13% to $32.1 billion and $6.6 billion, respectively. On the contrary, trading volume in equities strengthened by 2%, rising from $228.2 billion in May to $233.5 billion last month.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
