This bill under consideration by the Danish government can result in the banning of self-hosted Bitcoin wallet ban without regulatory approval and decentralized finance (DeFi) applications.
The move is in response to the Danish Financial Supervisory Authority’s (DFSA) concern over activities on unregulated cryptocurrency platforms, and all unregulated wallets have been banned.
However, the DFSA stands for its proposal claiming that they need regulations on cryptocurrencies and the lack of oversight specialization in DeFi.
Denmark intensifies crypto regulation amid industry growth
This new rule, if put into practice, may contradict the guidelines of MiCA and US policies concerning BTC self-custody wallets, and the exclusion of DeFi from MiCA regulations could lead to worries about innovation.
The rules set by the DFSA state that any company involved in the crypto industry and developing interfaces or mobile applications needs to be regulated and receive authorization to provide Bitcoin wallet, DeFi interfaces, and various other similar products to the people of Denmark.
Recently, the European Banking Authority (EBA) proposed the technical standards of MiCA regulation, which suggested updating their own funds and creating strict recovery plans for the issuers of USD-pegged stablecoins.
Critics against the regulatory proposal escalate
Despite admitting to some positive effects of the Proposed DFSA regulations, crypto enthusiast Mikko Ohtamaa has criticized the move for potential negative impacts, stating that it may hamper innovation.
However, according to Ohtamaa, Estonia introduced similar rules for self-custodian wallets, and at the same time, introducing similar regulations in Denmark could have a negative impact on the sector.
