Danish Regulator Plans to Prohibit Unhosted Bitcoin (BTC) Wallets
The Danish Financial Supervisory Authority (DFSA) is actively working on eliminating unhosted Bitcoin (BTC) wallets as part of its Decentralized Finance (DeFi) guidance.
Denmark Bitcoin Wallet Ban Aligns With MiCA Regulation
The DFSA is concerned about the activities of unregulated platforms in the cryptocurrency space. Specifically, the regulator emphasizes the importance of regulating all crypto platforms and service providers, including interface providers and mobile app developers.
DENMARK TO BAN BITCOIN WALLETS
We have now reached this point.
In the recent DeFi guidance issued by the Danish FSA, the regulator aims to cover all aspects of crypto regulation, including Bitcoin wallets, using the “interface” argument. The DFSA states…
— Mikko Ohtamaa (@moo9000) June 26, 2024
The use of unregulated interfaces is in violation of the upcoming Market in Crypto Asset (MiCA) regulatory framework. The enforcement of this rule is just a few days away, requiring all crypto ventures in the European Union to comply before then.
As a result of Denmark’s action, no crypto exchanges or trading platforms will be able to offer Bitcoin wallets, DEX interfaces, or any other crypto-related products to Danish customers without being regulated in Denmark.
Recently, the European Banking Authority (EBA) finalized the draft technical standards for prudential matters under the MiCA regulation, ensuring that all firms in the EU meet high financial standards. Amendments include changes in own funds requirements, liquidity provisions, and recovery plans for issuers of crypto assets. The regulation has a significant impact on stablecoins, especially those pegged to the USD.
Will MiCA Squeeze Crypto Out of Existence?
Some industry observers and key players in the crypto market believe that these rules are overly stringent.
Mikko Ohtamaa, who reported Denmark’s ban on unhosted Bitcoin wallets, suggested that the rules in MiCA are designed to eliminate digital assets, a sentiment shared by Gary Gensler, Chairman of the SEC. While the DFSA’s intentions may be good, Ohtamaa believes that excessive regulation may not be the best approach.
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