News

Danske Bank Phases Out Crypto Related Investment Instruments

News

Danske Bank Phases Out Crypto Related Investment Instruments

Today, Danske Bank, the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail customers, has released a statement on its page letting customers know its position about cryptocurrencies and crypto-related investments, saying that they have a negative view about the whole cryptocurrency concept. They recommend that customers refrain from investing in these markets, issuing a ban on crypto related investment instruments, like derivatives.
Their vision is justified by three main risks regarding cryptocurrencies :
a) Market Volatility. The cryptocurrency exchange market is highly susceptible to changes in their value, being able to go rise or drop 30% of its value in just a day or two; meaning that the risk of investing in these instruments is too high.
b) Lack of backup. The cryptocurrencies are not backed up by any central bank, and there is no warranty of them maintaining its value over the time. Their value is just justified by the people using them
c) Lack of transparency and regulatory control, that makes cryptocurrencies especially attractive for criminals. Being based on distributed blockchains, many of these assets are impossible to track, so enforcing KYC/AML (know your customer and anti-money laundering) policies is a difficult task.
Danske Bank also declares that every cryptocurrency derived deposit will be dealt with the same norms as with every deposit from any business nationally. Danske Bank will also still permit customers to buy cryptocurrencies using their credit cards; what seems a logical thing, because buying crypto with credit cards permits KYC/AML policies to be enforced.
This has been an especially busy week for cryptocurrencies in banks; in India, the RBI (Reserve Bank of India) banned also any kind of deals with cryptocurrency exchanges and related services. it seems that the trend for the banks is to ban crypto-related dealings until the regulation is stable and clear about the issue.