DeFi
Is Denmark Going to Ban Bitcoin Wallets? Here’s Everything You Need to Know!
- Denmark reportedly intends 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-custody wallets, which are common with Bitcoin [BTC]could be subject to regulation in Denmark. Reacting to recent guidance from the Danish FSA (Financial Supervisory Authority) on DeFi, Mikko Ohtamaa of Trading Protocol note,
“In the latest DeFi guidelines from the Danish FSA, the regulator goes too far: the guidelines try to capture everything in crypto 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 a “perceived gap” in the EU’s MiCA (Markets in Crypto Assets) regulation, which would come into force on December 30, 2024. MiCA regulations do not apply to decentralized finance.
Ohtamaa criticized the DFSA and noted that while its proposal have been adopted, offering BTC wallets in Denmark could be a challenge.
“This means that no one can offer Bitcoin wallets, DEX interfaces or anything that touches a token to the Danish anymore, because they would have to be regulated in Denmark.”
Although Estonia has apparently taken a similar route when it comes to self-custody wallets, the same has recently been rejected in the United States.
In March, claims against Coinbase Wallet were 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 manufacturers to develop peer-to-peer software It didn’t work.
Additionally, the recently passed US crypto infrastructure bill, the 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.
Adopting the DFSA proposal, as it stands, according to Ohtamaa, could have a negative impact on those offering self-service Bitcoin wallet services in Denmark, whether through apps or web browsers.