Denmark’s Financial Supervisory Authority (FSA) these days issued an official statement on the use of virtual currency in the country – and surprisingly, it is not all undesirable news.
Despite the fact that the FSA’s statement echoed warnings issued by the European Banking Authority (EBA) and red flags from regulators worldwide, it emphasised that cryptocurrencies, such as bitcoin, will not be policed by Denmark’s monetary regulators.
The statement highlights that virtual currency isn’t covered by Denmark’s current regulatory framework. As a result, cryptocurrencies can’t be subjected to the country’s regular economic regulation.
According to the FSA, carrying out enterprise with bitcoin and other cryptocurrencies does not qualify as issuance of electronic income, currency exchanges, brokerages or deposit services. The regulator stated:
“Virtual currencies are a kind of unregulated electronic income, as opposed to actual funds they are not issued or assured by a central bank, which in some situations can be used to make payments.”
It added that: “Virtual currencies have emerged in several different types, initial in the context of online gaming and social networks. Later, virtual currencies evolved to be used as an option to actual currency.”
As a outcome, bitcoin entrepreneurs who want to build organizations and establish exchanges in the country will not need to have government approval. A translation from the FSA’s internet site reads:
“Companies do not require permission to be capable to establish their operation in Denmark if they want to run bitcoin exchanges that also contain exchanging genuine cash.”
Risky investments
Even so, like the EBA, the FSA pointed out that investors who choose to purchase, trade and hold virtual currencies danger losing their investments, having their virtual currency stolen, or merely watching the value of their currency drop to zero.
The EBA has also warned that there is no assurance that virtual currencies can be exchanged for national currencies, adding that trading virtual currencies carries implications for both tax and crime.
Interestingly, the FSA is the first national regulator to implicitly name altcoins in its warning. The somewhat unflattering reference contains litecoin, zerocoin and linden dollars.
The FSA also added that bitcoin is accepted as payment by an growing number of businesses each on-line and offline.
Denmark’s ‘hands-off’ approach to bitcoin regulation is fascinating, but will other nations adhere to?
This report was co-authored by Grace Caffyn and Nermin Hajdarbegovic
Denmark Flag image by way of Shutterstock
View Denmark’s Authorities: Bitcoin is Not Regulated Right here on CoinDesk.
Denmark’s Authorities: Bitcoin is Not Regulated Right here
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