Category Archives: Danske Bank

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Lithuania Probe: Some Euro Banks Cited for Trading Big in Crypto

A government probe in Lithuania into the activities of private individuals and cooperate bodies has revealed that major European banks have been facilitating large crypto-fiat deals.

The country’s Financial Crime Investigation Service (FCIS) has been investigating activities which are reported to have happened over a period of two years. This investigation mainly concerns large trading transactions, some running into the millions of euros traded for cryptocurrencies and through European banks.

The investigation was part of a national analysis of financial activity, in order to examine the direction of money-flow in Lithuania’s financial system. The information was gathered by the FCIS from sources such as the Central Bank of Lithuania and government departments responsible for electronic fund regulation.

The FCIS found that some major financial institutions such as Danske Bank and Swedbank conducted business for their clients running into millions of euros. The next step, according to the investigators, is to find where the money originated, with 7 banks trading cryptocurrency worth €661 million. The three largest transactions handled by the banks were valued at 27.2,16.6 and 14.1 million euros

FCIS director Mindaugas Petrauskas reported that one Lithuanian resident recorded a profit from cryptocurrency trading of EUR 60 million, commenting, “The question arises as to where does it come from, that’s a lot of money.”

There has been a significant increase in funds raised through ICOs since 2017 with funds raised rocketing from EUR 82 million in 2017 to EUR 500 million in 2018 so far. The FCIS is concerned principally with money laundering aided by the anonymity of the transactions with wallets often located overseas. Petrauskas indicated that the investigation is in line with the current recommendations proposed by the Finance Ministry at further ICO regulation.

The Lithuanian Minister of Finance recently suggested that the country was in the “middle of an explosion of ICOs and blockchain based projects”, as the ministry published a guideline document which covered information for investors regarding ICOs and taxation.

The country has recently become a growing center for ICOs and crypto projects. Latest figures show that Lithuania is now attracting an impressive 10% of all global ICO investments, with cryptocurrency bringing in half a billion euros from such activities.

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Danske Bank Advises Investors to Refrain From Crypto

Danske Bank has released a statement on their website setting out its policy of “a negative position towards cryptocurrencies”. It is advising its customers to refrain from such investments.

The global Nordic bank, which serves over five million customers in northern Europe, is the biggest bank in Denmark. It made headlines earlier this week by banning cryptocurrencies like Bitcoin across all its platforms. The bank is currently phasing out all existing financial instruments, including derivatives, which previously gave clients access to cryptocurrency.

The ban is not absolute, however. Customers are still permitted to deposit funds from cryptocurrency, provided they comply with anti-money laundering regulations. Credit card holders can also continue trading cryptocurrency.

Lack of traditional financial features

In its statement, Danske Bank lists out several reasons for the policy, noting that cryptocurrencies are not backed by any central bank. This means that investors and consumers do not benefit from the protection typically offered by traditional investments.

The bank also expressed concern with the extreme volatility of cryptocurrency and their “non-transparent” price formation. It believes this limits the insight to market development and pricing factors.

Danske Bank criticized the “the lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes”, referring to past occasions of cryptocurrency involvement in facilitating “criminal transactions like money laundering or extortion”.

Hardline Nordic stance

The statement reflects the current hostility of several prominent Nordic and Scandinavian banks towards cryptocurrency. Nordea Bank banned employees from trading in Bitcoin assets last month, prompting the European Banking Federation – which has not clarified its policy on the issue – to say that “This could very well be a first” time it had heard of a bank banning Bitcoin investments.

Banks operating in northern Europe currently view external and decentralized fintech innovations as a threat to their current model of financial services. A consortium of Nordic banks, including Danske Bank, is currently exploring the idea of a “pan-Nordic” payment system that would create a global territory for domestic and international payments in multiple currencies.

 

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