Danish Regulator To Ban Unhosted Bitcoin (BTC) Wallets

The Danish Financial Supervisory Authority (DFSA) is working towards abolishing unhosted Bitcoin (BTC) wallets as part of its Decentralized Finance (DeFi) guidance.

Denmark Bitcoin Wallet Ban Aligns With MiCA Regulation 

The regulator is concerned about the activities of unregulated platforms in the crypto space. Markedly, the DFSA emphasizes the need for all crypto platforms and service providers including interface providers and mobile app developers to be regulated.

Ordinarily, the use of unregulated interfaces violates the legislation embedded in the upcoming Market in Crypto Asset (MiCA) regulatory framework. The partial implementation of the rule is only a few days away. This necessitates that all crypto ventures in the European Union are put in order before then.

As a result of Denmark’s move, no crypto exchanges or trading platforms would be able to offer Bitcoin wallets, DEX interfaces or any other crypto-related products to Danish customers anymore. The only exemption would be for them to get regulated in Denmark.

Two weeks ago, the European Banking Authority (EBA) completed the draft of the technical standards for the prudential matters as per the MiCA regulation. This involved ensuring that all the firms in the EU adhere to the high financial standards.

Some of the amendments include change in own funds requirements, changes in liquidity provisions and very strict recovery plans for the issuers of the crypto assets. Notably, the MiCA regulation affects stablecoins especially those pegged to the United States Dollar.

Will MiCA Squeeze Crypto Out of Existence?

A few market observers and key crypto players opine that these rules are rather rigid.

Mikko Ohtamaa who reported Denmark’s ban on unhosted Bitcoin wallets on X, suggested that the rules in MiCA are outlined to squeeze digital assets out of existence, a sentiment that Gary Gensler, the Chairman of the Securities and Exchange Commission (SEC) holds. The DFSA’s intention may be good, but Ohtamaa does not think “overregulation” is the right approach.

“Trying to force everyone to be a regulated intermediate in a peer-to-peer world sounds cool, but you might as well be honest with your talking points and say “In reality we want to ban all cryptocurrencies, we are just sneaky about it” because this is the outcome,” Ohtamaa, known by his affiliation with the Trading Protocol wrote on X.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture. Follow him on Twitter, Linkedin

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.