Danske Bank will, however, allow customers to purchase cryptocurrencies with a credit card. The bank is taking the move due to risks imminent in the business including lack of backing by a central authority and volatility.
Danske Bank, one of the largest banks in the Nordic region, will now not allow customers to use cryptocurrencies on its trading platforms. The bank is also asking customers to stop from investing in the digital assets.
Furthermore, the bank is stopping the option that allows customers to buy financial instruments such as derivatives with cryptocurrencies. However, customers will still be able to deposit proceeds from cryptocurrency investments as long as the deposits are in compliant with money laundering procedures. Customers can also still trade crypto using credit cards.
The bank is taking the move because of the absence of protection for investors and the fact that there is no central bank to back cryptocurrencies.
The move is also due to lack of transparency regarding the underlying value of crypto meaning. It could be lost due to high volatility. It also cites issues such as money laundering and financial crime.
The bank is also working with a consortium of other Nordic banks to create a pan-Nordic payment system. However, that will allow cross-border payments in multiple currencies. This would help reduce the threat from external fintech.
The bank runs MobilePay which is popular for payments in Denmark and Finland. With it, customers can transfer money between themselves and across businesses. Over 60 percent of the country’s population is now using the app.
The country still friendly to cryptocurrencies
Denmark is changing its previous position on cryptocurrencies though still largely friendly. Previously considered a crypto friendly nation, it did not recognize them as legal tender and they were not taxed. However, an announcement by the Danish Government and Financial Services Authority said the Bitcoin businesses will be a tax in a normal manner. Although individuals are still exempt from taxes as a result of trading cryptos.