The Danish Financial Supervisory Authority (DFSA) has issued an order to Saxo Bank, one of the largest online brokers in Europe, to liquidate its cryptocurrency holdings by the end of the year. The order comes as part of a wider crackdown on crypto-related activities by the regulator, which claims that they pose significant risks to financial stability and consumer protection.
According to the DFSA, Saxo Bank has violated several rules and regulations regarding its crypto trading and custody services, which it launched in 2018. The regulator alleges that Saxo Bank has failed to comply with anti-money laundering (AML) and counter-terrorism financing (CTF) requirements, as well as to ensure adequate risk management and governance processes. The DFSA also accuses Saxo Bank of misleading its customers about the nature and risks of crypto assets, which are not regulated or supervised by the authority.
Saxo Bank has expressed its disappointment and disagreement with the order, stating that it has always acted in accordance with the applicable laws and regulations, and that it has taken extensive measures to ensure the security and transparency of its crypto operations. The bank also claims that it has been in constant dialogue with the DFSA since 2018, and that it has never received any formal warnings or sanctions from the regulator before.
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Saxo Bank has been offering its clients access to crypto trading since 2018, when it launched its SaxoTraderGO platform. The platform allows users to trade Bitcoin, Ethereum, Litecoin, Bitcoin Cash and Ripple against 15 fiat currencies, as well as other asset classes such as stocks, bonds, forex and commodities. Saxo Bank claims that it has over 860,000 clients in 170 countries, and that its crypto trading volume has grown significantly in the past year.
However, the FSA has taken a different view on Saxo Bank’s crypto activities. In a letter dated June 30, 2023, the FSA stated that Saxo Bank must cease offering crypto trading services and liquidate its crypto holdings by July 31, 2023. The FSA argued that crypto assets are not regulated by any authority, and that they pose a high risk of fraud, theft, hacking and money laundering.
The FSA also said that Saxo Bank’s crypto exposure could harm its liquidity, solvency and reputation, and that it could undermine the trust of its clients and regulators. Saxo Bank has expressed its disappointment and disagreement with the FSA’s decision. In a press release issued on July 1, 2023, Saxo Bank said that it believes that crypto assets are a legitimate and innovative asset class that offers diversification and returns to its clients.
Saxo Bank also said that it has implemented robust security and compliance measures to ensure the safety and legality of its crypto trading services. Saxo Bank said that it will appeal the FSA’s decision and seek legal remedies to protect its interests and those of its clients.