Recent social media reports suggesting that Denmark plans to ban self-custodial cryptocurrency wallets are false. The Danish Financial Supervisory Authority (DFSA) clarified that they have not proposed such a ban.
Contrary to the misinformation circulating online, the DFSA has no intention to prohibit the use of self-custodial wallets, which are also known as non-custodial wallets. Tobias Thygesen, DFSA’s director for fintech, payments services, and governance, emphasized:
“We are aware of some misinformation circulating on social media suggesting that the DFSA intends to ban hardware wallets and other non-custodial wallets. This is incorrect. The DFSA has not proposed any such ban.”
Self-Custodial Wallets and MiCA Regulation
The DFSA’s clarification comes after their regulatory assessment of decentralization in relation to the Markets in Crypto–Assets (MiCA) Regulation, which became fully effective on June 30.
According to the DFSA, MiCA explicitly exempts crypto asset services that are “provided in a fully decentralized manner without any intermediary.” For a service to be regulated under MiCA, it must not be fully decentralized and must involve one of the activities listed in Article 3(16) of MiCA, such as crypto custody, trading, and other crypto services.
“The only regulated activity directly concerning wallets is providing custody and administration of crypto–assets on behalf of clients, which involves custody of crypto–assets on behalf of clients,” Thygesen explained. “Hardware wallets do not give custody of private keys to the wallet provider and thus are not regulated by MiCA. Non-custodial wallets, by their nature, are not subject to MiCAR.”
Misinterpretation and Clarification
Mikko Ohtamaa, co-founder of algorithmic investment protocol Trading Strategy, mistakenly interpreted the DFSA’s assessment in a social media post on June 26. He believed that by exempting self-custodial wallets, the DFSA essentially wanted to stop offering such wallets in Denmark. This interpretation was incorrect.
What Are Self-Custodial Wallets?
Self-custody is a method of storing cryptocurrencies like Bitcoin without any intermediary. This means that users hold their crypto assets directly and have full control over them. While self-custodial wallets allow users to act as their own bank, they also bear the full responsibility for maintaining the security of the wallet and the safety of the private key.
Unlike custodial crypto wallets, which may require Know Your Customer (KYC) procedures, self-custodial wallets do not. Ownership is verified solely through the private key, which remains under the control of the wallet owner.
Summary Review: Denmark has not proposed a ban on self–custodial cryptocurrency wallets. The DFSA’s recent statements and regulatory assessments have clarified their stance on the matter, reaffirming that self-custodial wallets remain outside the scope of MiCA regulation. This ensures that users in Denmark can continue to use these wallets without concern.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
