Denmark’s Biggest Bank Bans Cryptocurrency Trading

Danske Bank one of the biggest and innovation driven banks in Nordic region, Denmark says it isn’t going to back cryptocurrency trading, mostly Bitcoin. To make it worse, Danske Bank is also ruling out the options which are currently available to investors that allow them to buy financial instruments such as derivatives through cryptocurrencies.

 The bank in a statement said,

“Overall, we are negative towards cryptocurrencies and we strongly recommend that our customers avoid investing in cryptocurrencies,”

The bank lays a firm argument that the absence of a central bank to keep an eye on cryptocurrency and cryptocurrency trading only means that investors and consumers are totally unprotected, unlike the scenario in traditional fiat currencies, where the bank can back them.

Further, the lack of transparency regarding the underlying value of cryptocurrencies and cryptocurrency trading could lead to high loss of assets. Danske Bank is also worried that cryptocurrencies can be a vehicle for money laundering and financial crime, something which they think that the cryptocurrency trading is vulnerable to.

However, it will allow customers to deposit funds originating from cryptocurrency investments providing the deposit complies with anti-money laundering procedures. Customers can also continue using credit cards to trade cryptocurrencies.

MobilePay, a phone-based payment app, launched by Danske Bank in 2013, has now become very famous as a means of payment solution in Denmark and Finland. As with Swish in Sweden and Vipps in Norway, the app was launched in collaboration with other banks and its aim was to transfer money from friends to businesses as easily as sending a text message.

Although this was meant to be a free consumer app, 2017 saw fee-paying businesses taking it up in far higher volumes, as high as 27% of total transfers going through MobilePay. Over 60% of the Danish population now uses MobilePay, now a separate company.

Now, Danske Bank is working with a well known network of other Nordic banks to leverage the creation of a pan-Nordic payment system to create the world’s first area for domestic and cross-border payments in multiple currencies. This would ward off the Fintech threat to Nordic banks.

With banks in Denmark legally forbidding cryptocurrency trading, and tying up with several financial institutions to up their game in the centralized currency world, Denmark seems a little far away from adopting decentralized currencies.

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