Danish Regulators Dismiss Rumors of Banning Self-Custodial Cryptocurrency Wallets
Summary:
Danish regulators have dismissed social media speculation that they are planning to ban self-custodial cryptocurrency wallets. The Danish Financial Supervisory Authority (DFSA) clarified that these wallets do not come under the jurisdiction of the Markets in Crypto-Assets (MiCA) Regulation. Control over their stores and the associated private key is entirely the user's responsibility, a key distinction from custodial crypto wallets.
Recent posts on social media speculating that Denmark was preparing to outlaw Bitcoin wallets have been dismissed by Danish regulators, who confirm there are no plans to prohibit self-held cryptocurrency wallets. The Danish Financial Supervisory Authority (DFSA) has rebuked claims that they have intentions to bar the usage of non-custodial wallets, also known as self-custodial wallets.
Fintech, payments services and governance director at the DFSA, Tobias Thygesen, clarified to Cointelegraph that the rumors circulating about the proposed ban were baseless. He confirmed that, under the Markets in Crypto-Assets (MiCA) Regulation effective since June 30, self-custodial wallets naturally do not fall under the jurisdiction of the MiCA ruleset.
The DFSA issued an assessment to guide the regulation of decentralized crypto asset services back on June 25. This followed a review concerning the regulatory implications of decentralized systems under MiCA. In line with Thygesen's statement, services provided in a completely decentralized fashion that don't include any middleman are specifically exempted under MiCA.
Thygesen emphasized that hardware wallets, which don't transfer control of private keys to the provider of the wallet, and non-custodial wallets are not under the purview of MiCA. This directly contradicts the misinterpretation of the assessment by Mikko Ohtamaa, the co-founder of algorithmic investment protocol Trading Strategy, who suggested that the exemption of self-custodial wallets meant Denmark was planning to discontinue their use.
Understanding self-custodial wallets is key to dispelling such misconceptions. Essentially, these wallets allow users to store cryptocurrencies like Bitcoin (BTC) without an intermediary. Users have full control and responsibility over their assets and the private key associated with the wallet. Contrary to custodial crypto wallets, self-custodial wallets usually do not entail Know Your Customer (KYC) procedures.
Despite certain software wallets providing integrated interfaces to fully decentralized services, Thygesen noted that this aspect of their offering could be regulated under MiCA, provided they aren't fully decentralized. Complexities can arise, however, making it necessary to evaluate these cases individually. Thygesen's main point is that the DFSA is open to discussion about whether specific offers in Denmark fall within the remit of MiCA or not.
Published At
7/2/2024 2:59:10 PM
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