Crypto Regulations in Denmark
Bitcoins are essentially not regulated in Denmark because this particular digital currency doesn’t fall under the umbrella of financial services. Instead, financial services include issuing mortgages, payments for services, and issuing electronic funds.
Source: Denmark. Net
The Financial Supervisory Authority of Denmark does not regulate or prohibit the operation of cryptocurrency businesses in the country, including Bitcoin businesses.
Source: Company Formation Denmark
In Denmark, parties in cryptocurrency transactions must resolve whether their asset is classified as a form of payment (currency), a capital asset (investment), or a financial service to determine whether the transaction is subject to the regulation of Danish authorities. Depending on their characteristics, cryptocurrencies in Denmark may be subject to “legislation on alternative investment funds, prospectuses, and money laundering.” The Danish Financial Supervisory Authority (DFSA) has affirmed that cryptocurrencies used as a means of payment are generally not regulated by the DFSA. However, Denmark’s security laws might apply to the ICO depending on its characteristics. Specifically, ICOs that are akin to IPOs will be subjected to Danish securities law.
Source: Freeman Law
There is no license for virtual asset service providers in Denmark, but entrepreneurs must obtain a permit to operate from the FSA. Registration with the FSA is a prerequisite for a company to carry out the activities in question. The registration obligation was introduced so that the FSA could supervise businesses for compliance with AML rules and requirements. The FSA website specifies the procedure for obtaining authorization for a company to operate.
Source: Manimama
There is no specific legislation in Danish law governing the taxation of gains or losses from the sale of cryptocurrencies, and over the years tax authorities’ statements on the subject have varied widely, which has created confusion. However, based on the practices of the past few years, guidelines have been developed that have created a framework for cryptocurrency taxation.
Source: Manimama
While there are no specific tax rules for virtual currencies, companies that provide virtual asset services are subject to regular taxes in the country. Income from virtual currencies is regulated under the Danish National Tax Act. Income derived from the disposal of assets is not subject to tax in Denmark unless deemed income from speculation. Speculation from virtual currencies is subject to an assessment. Some of the following tax rates are relevant to these types of activities: 22% is the standard income tax applicable to the net income of a Danish company that is engaged in the buying and selling of virtual currencies; the individual income tax rate in Denmark has progressive rates between 8% and 56.52%; the capital gains tax rate for individuals is 27% or 42%.
Source: Company Formation Denmark
Aside from being subject to the AML Act, the conduct of exchanges for trading of virtual currencies alone is not subject to direct regulation. The connection between the purchaser of a virtual currency and the exchange where the purchase has been made will, if Danish law is applicable, be regulated under the Danish laws on, inter alia, contracts and good business practices.
Source: The Law Review
Danish startup unlocks €6 million to build financial infrastructure for crypto economy Januar offers local IBAN business accounts to crypto businesses in Europe through its first-of-its-kind payment service provider license with the Danish FSA.
Source: Tech Eu
A 33-year old Danish-native accused of Bitcoin money laundering has been sentenced to four years in prison. The court declared that the accused was aware of the provenance of the big sums of money received.
Source: BlockOnomi
Outside Denmark, other countries are making efforts to clamp down on financial crimes carried out using virtual currencies. Recently, a Canadian judge ordered a convicted drug dealer to forfeit more than 180 bitcoin ($936,000) that proceeded from his illegal drug trafficking.
Source: BlockOnomi
Denmark is launching a regulatory sandbox for fintech businesses – the first Nordic country to do so. The fintech sandbox allows fintech start-ups that have not yet acquired a license, to operate and test ideas and solutions in a safe environment. This enables startups to obtain valuable information and experience about the strengths and weaknesses of their solutions before applying for a costly license.
Source: CPH Health Tech
