Leading Danish bank, Danske Bank, has published a document announcing that 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 pertaining to the risks associated with cryptocurrencies, Danske customers will still be able to purchase virtual currencies via credit card.
Danske publishes dismissive appraisal of cryptocurrency markets
Danske Bank has published a document outlining its “negative position” with regard to cryptocurrencies. Established in 1871, Danske Bank operates in over a dozen countries and is one of Denmark’s largest retail banks.
The document outlines a number of concerns it holds regarding cryptocurrencies, stating that “They lack the investor and consumer protection typically connected with traditional currencies and investments.”
Danske Bank “strongly recommend[s] that [its] customers avoid investing in cryptocurrencies”
Danske asserts that “the price formation [for cryptocurrencies] is non-transparent,” claiming that “As an investor, [one] ha[s] very limited insight to how the market is developing and what is driving the price.” The high volatility of the virtual currency markets is also emphasized.
“Most importantly,” the bank states, “the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes and we know that they on several occasions have been involved in criminal transactions like laundering or extortion.” Danske adds that it has “an obligation to assist in the fight against financial crime and money laundering,” concluding that “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,” Danske states, “it is not possible to trade cryptocurrencies on our trading platforms.”
Crypto derivatives “phased out,” credit card crypto purchases OK
Danske Bank has introduced a number of measures in accordance with its position, stating that it “do[es] not in any way want to support the investment environment surrounding cryptocurrencies.”
As such, Danske has “phase[d] 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. “These types of securities,” Danske asserts, “are characterized by high volatility and risk.”
Despite the measures, Danske will “not 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.”
Moving forward, Danske bank will “monitor the market closely, and if the cryptocurrency market becomes more transparent and mature, we might reconsider this position.”
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