Danske Bank has released a statement on their website setting out its policy of “a negative position towards cryptocurrencies”. It is advising its customers to refrain from such investments.
The global Nordic bank, which serves over five million customers in northern Europe, is the biggest bank in Denmark. It made headlines earlier this week by banning cryptocurrencies like Bitcoin across all its platforms. The bank is currently phasing out all existing financial instruments, including derivatives, which previously gave clients access to cryptocurrency.
The ban is not absolute, however. Customers are still permitted to deposit funds from cryptocurrency, provided they comply with anti-money laundering regulations. Credit card holders can also continue trading cryptocurrency.
Lack of traditional financial features
In its statement, Danske Bank lists out several reasons for the policy, noting that cryptocurrencies are not backed by any central bank. This means that investors and consumers do not benefit from the protection typically offered by traditional investments.
The bank also expressed concern with the extreme volatility of cryptocurrency and their “non-transparent” price formation. It believes this limits the insight to market development and pricing factors.
Danske Bank criticized the “the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes”, referring to past occasions of cryptocurrency involvement in facilitating “criminal transactions like money laundering or extortion”.
Hardline Nordic stance
The statement reflects the current hostility of several prominent Nordic and Scandinavian banks towards cryptocurrency. Nordea Bank banned employees from trading in Bitcoin assets last month, prompting the European Banking Federation – which has not clarified its policy on the issue – to say that “This could very well be a first” time it had heard of a bank banning Bitcoin investments.
Banks operating in northern Europe currently view external and decentralized fintech innovations as a threat to their current model of financial services. A consortium of Nordic banks, including Danske Bank, is currently exploring the idea of a “pan-Nordic” payment system that would create a global territory for domestic and international payments in multiple currencies.