Danske Bank, the leading Danish bank, has published a document according to which the company does not wish to «support the investment environment surrounding cryptocurrencies». Danske bank will phase out the possibility of its customers purchasing financial instruments comprising cryptocurrency derivatives. Despite the bank’s concerns about the risks associated with cryptocurrencies, Danske customers will still be able to purchase cryptocurrencies via credit card.
Established in 1871, Danske Bank operates in over a dozen countries and is one of Denmark’s largest retail banks. It has published a document outlining its «negative position» with regard to cryptocurrencies.
According to the document, cryptocurrencies «lack the investor and consumer protection typically connected with traditional currencies and investments».
Danske Bank asserts that the price formation for cryptocurrencies is non-transparent, claiming that investors have very limited insight to how the market is developing and what is driving the price. The high volatility of the cryptocurrency markets is also emphasized.
The bank states the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes like laundering or extortion. Danske adds that it has an obligation to assist in the fight against financial crime and money laundering.
«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», – said Danske.
Danske Bank has phased out the possibility to buy financial instruments directly related to the price of cryptocurrencies, such as derivatives or ETNs (Exchange Traded Notes) that mirror the price of a cryptocurrency, because «these types of securities are characterized by high volatility and risk».
Despite the measures, Danske Bank won’t block the usage of a Danske Bank issued credit cards in connection with trading cryptocurrencies. Danske bank will also treat deposit funds originating from cryptocurrencies the same way as deposit funds stemming from other types of investments.
In case the cryptocurrency market becomes more transparent and mature, Danske Bank might reconsider its position.
