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Danske Bank Takes Position on Cryptocurrencies, Will Not Interfere With Crypto Trading

19/06/2021 by Idelto Editor

Danske Bank will not block credit cards used in crypto trading, according to its newly announced position on cryptocurrencies. The Danish bank would also accept deposits related to crypto investments, although it follows a cautious approach towards decentralized digital assets.

Denmark’s Largest Bank Clarifies Its Stance on Cryptocurrencies

Responding to mounting inquiries from customers and other stakeholders, Danske Bank has released an official position on crypto assets. “In recent years, cryptocurrencies such as bitcoin and ethereum have received significant attention from investors and media,” the bank noted, outlining its current stance on crypto trading and investing.

Denmark’s largest banking institution recognizes that “cryptocurrencies represent a significant digital innovation in financial services” and praises the “great potentials in the blockchain technology.” At the same time, it continues to maintain “a very cautious approach towards cryptocurrencies.” The bank listed several reasons for that.

In the first place, Danske finds it hard to meet its obligations to fight financial crime and money laundering as crypto trade is “not always sufficiently transparent.” Pricing is opaque and fluctuating, the bank added, leaving investors with limited market insight.

Furthermore, as crypto trading is only partially regulated, clients do not get the same level of consumer protection that comes with other financial products, Danske insisted. The bank also feels that the “extremely energy intensive” processing of cryptocurrency transactions clashes with its own ambition to promote sustainable development.

Crypto Investors Are Welcome to Deposit Funds With Danske

Citing these concerns, Danske Bank reminded customers that its platforms do not currently support the trading of cryptocurrencies and crypto-based financial instruments. The financial institution also advised against investing in digital assets or related products in general. However, the Danish banking group pledged its support for the development of crypto regulations under the new EU legislation called Regulation of Markets in Crypto Assets (MiCA) while emphasizing:

We continuously monitor developments in the area of cryptocurrencies, and as the cryptocurrency market matures and is further regulated, we will review our position.

Despite its hesitant attitude towards cryptocurrencies, Danske is not completely turning its back on crypto traders and investors. For example, the bank said it doesn’t block credit cards when they are used in crypto trading, provided customers comply with applicable anti-money laundering rules and laws. The bank also stressed it would treat deposits of funds stemming from cryptocurrency investments just like deposits from any other type of investment.

What’s your opinion about Danske Bank’s position on cryptocurrencies? Share your thoughts in the comments section below.

Denmark’s Tax Authority Sends Warning Letters to 20,000 Crypto Owners

11/12/2019 by Idelto Editor

The tax authority of Denmark has reportedly sent out warning letters to 20,000 crypto owners asking them to amend their tax returns, pay taxes on crypto gains, or face penalties. The tax agency is demanding a full breakdown of their crypto transactions; it recently obtained information on these traders from three local crypto exchanges.

Also read: IRS Now Requires Tax Filers to Disclose Crypto Activities

Warning Letters to Crypto Investors

Danish Skattestyrelsen, the tax authority of Denmark, has reportedly sent out warning letters to 20,000 cryptocurrency owners. Swedish crypto tax startup Koinly posted a copy of the letter on its website on Monday. The company detailed:

In the last 2 weeks, the agency began sending out warning letters to these investors urging them to amend their tax reports by the 15th of December or face penalties.

“Many of our Danish users have received these letters, Skat is asking for a full breakdown of all their transactions and asking them to fix all past reports as well,” said CEO Robin Singh who founded Koinly last year. “Filing tax on cryptocurrency trades is a difficult task as crypto traders usually hold several exchange accounts and wallets and freely transfer crypto between them, so there’s no easy way to figure out what the capital gains are for any particular trade.” The company claims to have helped thousands of crypto investors track and generate tax reports for funds worth over $250 million last year.

Tax Agency Has Info on 20,000 Crypto Traders

Earlier this year, Skattestyrelsen announced that it had been authorized by the country’s tax council, Skatterådet, to obtain information on crypto traders using local exchanges. The agency then announced on Aug. 29 that it had acquired information on 20,000 citizens trading cryptocurrency on these platforms. The tax agency declared:

For the first time, the tax authorities have received information on trading, for example, bitcoins, on Danish crypto exchanges. In total, information of approx. 20,000 citizens.

The exchanges were required to provide information on all crypto purchases and sales made between Jan. 1, 2016, and Dec. 31, 2018. The data obtained includes “identification information such as names, addresses, social security numbers and possibly CVR [business registration] information,” Skattestyrelsen revealed.

How Crypto Transactions Are Taxed in Denmark

The Danish tax authority explains on its website that trading bitcoin or other cryptocurrencies is considered speculation, meaning that the purpose of acquiring them is to make a profit. Therefore, as a general rule, profits or losses from their sales must be disclosed to the tax authority. Anyone unclear whether their trading activities are considered speculation can ask the tax agency for a specific “binding” answer, which costs DKK 400 ($60) and takes between 3-6 months. The answer is valid for a maximum of five years.

The letters sent to some 20,000 crypto traders request information about profits and losses from crypto transactions made during the fiscal year 2016 through 2018, calculated using the FIFO method. The tax agency’s website describes:

If you have several purchases, you must initially calculate profits and losses according to the FIFO principle (FIFO = First In First Out). This means that the bitcoins you bought first are the ones you sell first.

Tax Agencies Worldwide Turning Attention to Cryptocurrencies

A growing number of tax authorities worldwide are turning their attention to cryptocurrencies as they have become more popular with growing market capitalizations. Koinly asserted Monday that “Tax agencies are taking note of bitcoin and want to avoid it being seen as a safe haven from taxes.” CEO Singh noted that Denmark has special laws about how capital gains are reported, elaborating:

You can only offset profits with losses from the same cryptocurrency during the same income tax year. This is different from how it works in other countries so existing solutions require a lot of manual work.

The Danish tax authority is not the only one that has sent letters to crypto investors. The U.S., Canada, and India are among the countries that have similarly sent letters to crypto owners seeking to tax their crypto gains.

In July, the U.S. Internal Revenue Service (IRS) announced that it sent out letters to over 10,000 crypto investors reminding them of their tax obligations. The IRS has also stepped up other efforts to identify and convict crypto tax evaders. In its report issued last week, the agency emphasized that “Cryptocurrencies are undermining the financial and tax system,” adding that cyber criminals “now deal in cryptocurrency, again thinking this will make them anonymous, but our agents have once again proved that there is nowhere to hide. We will not stop in our pursuit.” Furthermore, the IRS is now using a new tax form requiring all tax filers to disclose whether they received, sold, sent, exchanged, or acquired any crypto during the year.

“As regulations and guidelines around cryptocurrency taxes clear up, more people are likely to receive similar letters,” Koinly wrote. “This is just the first step in the fight against tax evasion and more serious actions are likely to be taken against investors in the future so it is a good idea to get your affairs in order as early as possible.” News.Bitcoin.com has previously published a tax guide as well as a list of useful tax tools for crypto owners.

What do you think of the Danish tax agency sending out warning letters to 20,000 crypto traders and how it was authorized to obtain information from local crypto exchanges? Let us know in the comments section below.

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Denmark’s Tax Agency to Collect Information About Bitcoin Traders

15/01/2019 by Idelto Editor

Danish tax authorities will soon be going after cryptocurrency traders in the country and beyond. The plan is to collect data from local bitcoin exchanges in order to verify if citizens who have traded digital assets have paid the right taxes. Information about foreign citizens and entities will be shared with other countries.

Also read: 5 Crypto Exchanges Have Been Licensed in Gibraltar Since Regulation

Tax Agency Authorized to Gather Data From Three Danish Exchanges

Skattestyrelsen, the Danish Tax Agency, announced it has been authorized by the country’s Tax Council, Skatterådet, to obtain information about cryptocurrency trade conducted on three Danish exchanges between Jan. 1, 2016 and Dec. 31, 2018. The authority noted that it’s the first time it will access this kind of data. Karin Bergen, the agency’s director responsible for personal income tax collection, said:

With the permission of the Danish Tax Council, we will for the first time gain access to the trades made via Danish exchanges. This gives us new opportunities with respect to exerting control in the field.

The three platforms must now provide information about all purchases and sales of cryptocurrency made by their customers during the two-year period. They will be obliged to include identification information such as names, addresses, and CPR numbers, the personal ID numbers issued by the Danish Civil Registration System.

The decision to permit the Danish Tax Agency to collect the data was taken at the last meeting of the Tax Council in December. It followed news that the agency has been informed by Finland’s tax authorities about Danish citizens trading cryptocurrencies on a Finnish bitcoin exchange. The Danish tax body also plans to share information about crypto transactions made by foreign citizens and companies in Denmark with tax authorities in the respective countries.

Big Market That Needs to Be Looked Into

Skattestyrelsen is now contacting the Danish crypto exchanges in order to establish a procedure for the disclosure of the information. Once the data is received, the Tax Agency will ensure that citizens who have traded cryptocurrency have paid their taxes. Bergen further commented:

Without going too far, I think one can say this is a big market that we need to look into. When we recently received information from the Finnish bitcoin exchange, it gave us a small portion of the larger picture, which we now have the opportunity to uncover even more of. However, it’s still too early to tell how many traders are out there and how much money has been traded.

The Danish tax authority will adjust the tax base for each trader before the summer. Every case will be reviewed and treated individually to determine whether a cryptocurrency trade is part of the taxable income.

In December, the Tax Agency was tipped off by Finnish tax authorities about around 2,700 Danes trading on a cryptocurrency exchange based in Finland. According to the official estimate, the Danish citizens have traded coins worth more than 100 million krones (~$15 million) between 2015 and 2017.

Last month, the authority quoted a survey conducted by the National Tax Board which found that 450,000 Danes are considering shopping with cryptocurrency. The agency launched a campaign to inform taxpayers about their obligations but also the deductions they are entitled to.

What do you think about Danish tax authorities collecting information from crypto exchanges? Share your thoughts on the subject of crypto taxation in the comments section below.

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Denmark’s Largest Bank May Have Facilitated up to $150 Billion in Money Laundering

09/09/2018 by Idelto Editor

Companies from Russia and other parts of the former Soviet Union have apparently turned the small country of Estonia into a massive money laundering haven. An investigation into the Estonian branch of Denmark’s largest bank is examining up to $150 billion which may have been involved.

Also Read: The Daily: Robinhood Aiming for IPO, Dodgers to Give Away Crypto Tokens

From $3.9 Billion to $150 Billion

Investigators at Danske Bank (CPH: DANSKE), the largest bank in Denmark, are reportedly combing through a whopping $150 billion worth of transactions that passed through its Estonian branch between 2007 and 2015. While its likely not all of the suspicious funds are from an illegal source, this is a jump by an order of magnitude from the bank’s initially suspected figure said to be involved with money laundering by Russian and other Eastern European companies.

Last year Danish media sources reported the suspected laundered funds at $3.9 billion but in early July the figure jumped to between $8 and $9 billion. And earlier this month, FT reported that up to $30 billion may be suspect. The bank’s stock price has taken a considerable hit from the revelations.

“Any conclusions should be drawn on the basis of verified facts and not fragmented pieces of information taken out of context,” Danske Bank chairman Ole Andersen told the Wall Street Journal which brought up the $150 billion figure. “As we have previously communicated, it is clear that the issues related to the portfolio were bigger than we had previously anticipated.”

Weak Deterrence?

According to Estonian law, an individual may face up to ten years in jail for taking part in an organized money laundering crime. However, a company guilty of money laundering faces a maximum penalty of just 16 million euros.

Back in July, the bank’s Board announced it intends to waive all income from suspicious transactions in Estonia and use it “to the benefit of society,” like supporting efforts to combat financial crime. “It is still too early to draw any conclusions regarding the extent of the issues, as the comprehensive investigations into the matter are still ongoing. However, it is clear that we did not live up to our own standards or the expectations of society at large when it came to preventing our Estonian branch from being used for potentially illegal activities at the time when these transactions took place. This is something we deeply regret and which we should not benefit from financially in any way. Therefore we will not keep the income from these suspicious transactions,” CEO Thomas F. Borgen, said at the time.

Why are regulators going after crypto with so much money laundering going on in the banking system? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

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Danske Bank Bans Investments in Cryptocurrency-Related Instruments

06/04/2018 by Idelto Editor

Leading Danish bank, Danske Bank, has published a document announcing that the company does not wish to “support the investment environment surrounding cryptocurrencies.” Danske bank will “phase out the possibility of” its customers purchasing financial instruments comprising cryptocurrency derivatives. Despite the bank’s concerns pertaining to the risks associated with cryptocurrencies, Danske customers will still be able to purchase virtual currencies via credit card.

Also Read: Iranian Officials Issue Contradictory Statements Regarding Telegram Ban

Danske Publishes Dismissive Appraisal of Cryptocurrency Markets

Danske Bank has published a document outlining its “negative position” with regard to cryptocurrencies. Established in 1871, Danske Bank operates in over a dozen countries and is one of Denmark’s largest retail banks.

The document outlines a number of concerns it holds regarding cryptocurrencies, stating that “They lack the investor and consumer protection typically connected with traditional currencies and investments.”

Danske Bank “Strongly Recommend[s] That [its] Customers Avoid Investing in Cryptocurrencies”

Danske asserts that “the price formation [for cryptocurrencies] is non-transparent,” claiming that “As an investor, [one] ha[s] very limited insight to how the market is developing and what is driving the price.” The high volatility of the virtual currency markets is also emphasized.

“Most importantly,” the bank states, “the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes and we know that they on several occasions have been involved in criminal transactions like laundering or extortion.” Danske adds that it has “an obligation to assist in the fight against financial crime and money laundering,” concluding that “At the current stage, cryptocurrencies do not offer the sufficient level of transparency in order for us to live up to our obligations within anti-money laundering regulation.”

“For these reasons,” Danske states, “it is not possible to trade cryptocurrencies on our trading platforms.”

Crypto Derivatives “Phased Out,” Credit Card Crypto Purchases OK

Danske Bank has introduced a number of measures in accordance with its position, stating that it “do[es] not in any way want to support the investment environment surrounding cryptocurrencies.”

As such, Danske has “phase[d] out the possibility to buy financial instruments directly related to the price of cryptocurrencies,” such as “derivatives or ETNs [Exchange Traded Notes]” that mirror the price of a cryptocurrency. “These types of securities,” Danske asserts, “are characterized by high volatility and risk.”

Despite the measures, Danske will “not block the usage of a Danske Bank issued credit cards in connection with trading cryptocurrencies. Danske bank will also treat “deposit funds originating from cryptocurrencies […] the same way as deposit funds stemming from other types of investments.”

Moving forward, Danske bank will “monitor the market closely, and if the cryptocurrency market becomes more transparent and mature, we might reconsider this position.”

What do you think of Danske’s position regarding cryptocurrencies? Share your opinion in the comments section below!

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