Danish FSA’s DeFi Guidance Sparks Concerns in Crypto Community
The latest guidance from the Danish Financial Supervisory Authority (FSA) on decentralized finance (DeFi) regulations has raised significant concerns within the crypto community. The directions aim to encompass all aspects of crypto regulation, including Bitcoin wallets, through the “interface” argument.
What Do Danish Rules Say?
A crypto expert revealed that the DFSA mandates regulation for interface providers, including Bitcoin wallets, mobile app developers, and more. This broad interpretation suggests that any interface used in crypto transactions, from web browsers to decentralized exchange (DEX) interfaces, must be regulated.
However, this approach contradicts the European Union’s Markets in Crypto Assets (MiCA) regulation, which aims to provide a balanced regulatory framework for the crypto industry. The Danish FSA’s guidance appears influenced by the Financial Action Task Force’s (FATF) stringent stance, which advocates for regulation of all crypto-related interfaces.
If enforced, this guidance would require service providers offering Bitcoin wallets, DEX interfaces, or any token-related services to Danish users to undergo regulatory approval in Denmark.
It’s important to note that banning peer-to-peer or “unhosted wallets” was previously proposed by some far-left and far-right MEPs during MiCA’s development. However, there are political forces in the EU that aim to emulate the Chinese model.
Market Impact and Future Developments
In the market, Bitcoin (BTC) price dropped by around 6% in the last 7 days, falling below the $60,000 level. At press time, Bitcoin is trading at an average price of $61,460. The cumulative crypto market cap saw a slight increase over the last day, standing at $2.26 trillion, while the 24-hour trading volume decreased by 27% to $62 billion.
Experts have highlighted confusion among crypto asset service providers in the EU regarding deadlines for sustainability disclosures mandated by MiCA. Crypto issuers and service providers must make sustainability disclosures for asset-referenced tokens (ARTs) and electronic money tokens (EMTs) starting June 30, 2024, with all providers required to comply by the end of 2024.
The next steps taken by the authorities will be crucial for the future of crypto regulation.
Not a financial advice.