Regulation
Will Denmark ban Bitcoin wallets? Here’s everything you need to know!
- Denmark reportedly plans to regulate self-custody wallets and other “DeFi interfaces.”
- Denmark’s plans do not reflect MiCA guidelines or the US treatment of BTC custodial wallets.
Self-custodial wallets, common with Bitcoin [BTC]could be regulated in Denmark. Reacting to the Danish FSA’s (Financial Supervisory Authority) recent guidance on DeFi, Mikko Ohtamaa of Trading Protocol note,
“In the Danish FSA’s latest DeFi guidelines, the regulator goes too far: the guidelines try to capture everything related to cryptocurrency regulation, including your Bitcoin wallet, using the ‘interface’ argument . »
Ohtamaa added that the interface thesis could affect everything, including Bitcoin wallet service providers.
“You don’t have to think too hard to realize that everything is an interface: your computer, your web browser, your Bitcoin wallet, the Uniswap website, etc.”
Will Denmark’s plans impact Bitcoin?
The DFSA’s possible decision was based on the “perceived gap” in the European MiCA (markets in crypto assets) regulations, which would come into force on December 30, 2024. MiCA regulations do not apply to decentralized finance.
Ohtamaa criticized the DFSA and noted that if proposal have been adopted, offering BTC wallets in Denmark could be a challenge.
“This means that no one can anymore offer Danish Bitcoin wallets, DEX interfaces or anything related to a token, because they would have to be regulated in Denmark.”
Although Estonia has apparently taken a similar route regarding self-custody wallets, the same has recently been rejected in the United States.
In March, complaints were filed against Coinbase Wallet abandoned in the SEC lawsuit against Coinbase, reinforcing the victory of self-custody wallets in the United States.
“Significant setback for the SEC with Judge Failla granting Coinbase’s motion to dismiss the SEC’s claim that Coinbase acted as a broker-dealer by offering non-custodial digital wallet software. The SEC aimed to discourage builders from developing peer-to-peer software. It didn’t work’
Additionally, the recently passed US crypto infrastructure bill, FIT21 Act, opted to study DeFi, like MiCA, instead of regulating it.
That said, the DFSA is currently seeking feedback from private stakeholders. However, it remains to be seen how the DFSA will improve and adopt the proposals on DeFi.
According to Ohtamaa, adopting the DFSA proposal as is could negatively impact those offering self-service Bitcoin wallet services in Denmark, whether through apps or web browsers.