Denmark is not considering a ban on self-custodial cryptocurrency wallets, despite recent misinformation circulating on social media. The Danish Financial Supervisory Authority (DFSA) clarified that rumors about a potential ban on hardware wallets and other non-custodial wallets are untrue.
Tobias Thygesen, the director for fintech, payments services, and governance at DFSA, stated that self-custodial wallets, also known as non-custodial wallets, are not regulated under the Markets in Crypto-Assets (MiCA) Regulation by nature. The MiCA Regulation, which became effective on June 30, exempts fully decentralized crypto-asset services from regulation.
The DFSA’s assessment, issued on June 25, outlined principles to tackle challenges in overseeing decentralized crypto-asset services. According to Thygesen, the only regulated activity concerning wallets is providing custody and administration of crypto-assets on behalf of clients.
Mikko Ohtamaa, a co-founder of algorithmic investment protocol Trading Strategy, misinterpreted DFSA’s assessment, believing that the exemption of self-custodial wallets meant they would no longer be offered in Denmark, which is not the case.
Self-custodial wallets allow users to store cryptocurrencies like Bitcoin without relying on intermediaries, giving them full control over their assets. Users must take responsibility for the security and safety of their private keys when using self-custodial wallets.
Unlike custodial crypto wallets that often require Know Your Customer procedures, self-custodial wallets primarily rely on private keys for ownership verification. These wallets come in various forms, such as software-based wallets like MetaMask and hardware wallets like Ledger or Trezor.
DFSA’s assessment aimed to raise awareness of potential regulatory obligations for software wallets that integrate interfaces to decentralized services in addition to wallet services. If these integrations are not fully decentralized, they could be subject to independent regulation under MiCA.
Overall, the DFSA emphasized the importance of understanding regulatory requirements and ensuring compliance, especially in the evolving landscape of cryptocurrency services.
Image source: Mikko Ohtamaa
Reference:
– SEC sues Consensys over MetaMask’s brokerage, staking services
– Crypto-Sec: Phishing scammer goes after Hedera users, address poisoner gets $70K