The largest bank in Denmark, Danske Bank, published a document stating that it will not support investments in cryptocurrencies. The Danish bank is the latest financial giant to join the growing list of institutions and states that have banned cryptocurrency-related activities.
“We have a negative position towards cryptocurrencies and strongly recommend that our customers refrain from investing in the field,” the bank said.
Unlike traditional currencies and investments, cryptocurrencies lack protection for investors, according to Danske Bank. The bank pointed out that cryptocurrencies have turned out to be very unstable. At the beginning of this year alone, prices of SegWit-Coin BTC (also known as Bitcoin Legacy or Core) kept fluctuating and even fell lower than the $7,000 mark. Other cryptocurrencies like Ethereum, Litecoin and Monero also suffered the same fate. The bank raised concerns about the price formation of all cryptocurrencies, as there are uncertainties of what drives their market prices. They also believe that investors have limited insight on how the market is developing.
Most importantly, Danske Bank officials are wary about the lack of transparency and regulatory control in cryptocurrency markets.
“The lack of transparency and regulatory controls 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,” the bank said, adding 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,” according to Danske Bank.
The Danish bank also phased out possibilities of purchasing any financial instruments that are directly related to the prices of cryptocurrencies. These include prices that could be derivatives or Exchange Traded Notes (ETNs) that mirror the price of cryptocurrency. According to the bank, these types of securities are characterized by high volatility and risk.
Cryptocurrency deposits, however, will still be accepted at Danske Bank. According to the bank, all cryptocurrency deposits will be treated same way as deposit stemming from other types of investments. Clients will also be able to purchase cryptocurrencies with their credit cards, as long as they comply with the current regulatory laws, the bank said.
Despite their current stand, Danske Bank is willing to monitor the cryptocurrency market closely and possibly change their stand. This, however, will only happen if the market becomes more transparent and mature.
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