Denmark's largest bank warns customers against Cryptocurrencies and suspends trading

Denmark's largest bank warns customers against Cryptocurrencies and suspends trading​

Danske Bank, Denmark's largest bank, published a four-point report on June 17, 2021, describing reasons to be cautious when trading in digital assets and outlining its official position on cryptocurrencies.

While the bank advised users to be cautious, it did not take a practical stance against cryptocurrency.
The bank stated that it will not provide cryptocurrency services to its customers, but that it will not interfere with cryptocurrency platform transactions.

Customers who deposit funds derived from cryptocurrency investments will be treated in the same manner as deposits derived from other types of investments.

Furthermore, Danske Bank does not prohibit the use of a credit card issued by itself in connection with cryptocurrency trading. However, like all other credit card transactions, customers must follow applicable anti-money laundering (AML) procedures and laws.

The bank acknowledged that cryptocurrencies represented a significant digital innovation in financial services and stated that many of its customers were interested in the technology.

The bank also praised the potential of blockchain technology but concluded with four reasons to be cautious when dealing with cryptocurrencies.

They are as follows:

1. Lack of transparency

The cryptocurrency market is not always transparent, which may make it difficult for a financial institution, such as Danske Bank, to meet its obligations to combat financial crime and money laundering.

1. Lack of regulation and consumer protection measures

Consumers do not always have the consumer protection associated with regulated financial products because cryptocurrency trade is only partially regulated by financial regulation.

1. Volatility of cryptocurrency pricing

Cryptocurrency pricing is opaque and volatile, and as an investor, you have little insight into how the market develops and what drives the price.

1. Environmental impact

Transactions involving certain cryptocurrencies necessitate extremely large amounts of computing power that are extremely energy intensive, which is contrary to Danske Bank's ambition to promote sustainable development in collaboration with its customers.


Danske Bank, citing these concerns, reminded customers that its platforms do not currently support the trading of cryptocurrencies and crypto-based financial instruments.

The financial institution also warned against investing in digital assets or related products in general.

However, the Danish banking group promised its support for the development of crypto regulations under the new EU legislation known as Regulation of Markets in Crypto Assets (MiCA), while emphasizing that it continuously monitors developments in the area of cryptocurrencies and that as the cryptocurrency market matures and is further regulated, Danske Bank will review its position.

 

The banks will try to protect their system until they adapt the system themselves and take credit as being the real innovators.