Denmark's Largest Bank Sets Out Cyptocurrency Policy

Danske Bank, the biggest bank in Denmark, has released a document stating that it will not allow the trading of cryptocurrencies on its platforms.

In a letter to its customers, Danske Bank said they have a negative position towards cryptocurrencies and recommended that their customers refrain from investing in the space. The bank argues that the absence of a central bank to back cryptocurrency means that investors and consumers are not protected in the same way that they are with traditional currencies and investments.

The bank further notes that high volatility and a lack of pricing transparency provide “very limited insight” into market development and factors affecting prices. The bank is also worried that cryptocurrencies can be a vehicle for financial crime and money laundering.

“As a financial institution, we have an obligation to assist in the fight against financial crime and money laundering,” the bank said. “At the current stage, cryptocurrencies do not offer the sufficient level of transparency in order for us to live up to our obligations within anti money laundering regulation. For these reasons, it is not possible to trade cryptocurrencies on our trading platforms. However, we monitor the market closely, and if the cryptocurrency market becomes more transparent and mature, we might reconsider this position.”

Due to the above-mentioned reasons, Danske Bank also decided to phase out the possibility to buy financial instruments, such as derivatives or exchange traded notes (ETNs), that are linked to the price of cryptocurrencies. The bank said these types of securities are characterized by high volatility and risk.

However, the bank will still allow customers to deposit funds originating from cryptocurrency investments providing the deposit complies with anti-money laundering procedures. Customers will also be allowed to use their credit cards to purchase cryptocurrencies.

“We do not block the usage of a Danske Bank issued credit card in connection with trading cryptocurrencies,” the bank said. However, as with all credit card transactions, customers should comply with current anti-money laundering procedures and regulation.”

While Danske bank remains suspicious of cryptocurrencies, it has been somewhat more keen on blockchain technology. Since joining the R3 consortium in late 2015, Danske Bank has been testing a number of use cases with other R3 members through an open-source distributed ledger platform, specifically for wholesale financial markets.

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