Denmark has not proposed banning self-custodial cryptocurrency wallets, despite rumors circulating on social media. The Danish Financial Supervisory Authority (DFSA) clarified that they have no intentions of banning non-custodial wallets, also known as self-custodial wallets.
Tobias Thygesen, DFSA’s director for fintech, payments services and governance, spoke out against the misinformation, stating that self-custodial wallets are not subject to MiCA by nature. This clarification came after the regulatory assessment of decentralization in the context of the Markets in Crypto-Assets (MiCA) Regulation, which came into effect on June 30.
Thygesen explained that MiCA explicitly exempted crypto-asset services provided in a fully decentralized manner without any intermediary. In order for a service to be regulated under MiCA, it must not be fully decentralized and should involve one of the activities listed in Article 3(16) of MiCA, such as crypto custody, trading, and other crypto services.
Mikko Ohtamaa, co-founder of algorithmic investment protocol Trading Strategy, misinterpreted the assessment in a post on June 26. He mistakenly believed that by exempting self-custodial wallets, DFSA essentially wanted to stop offering such wallets in Denmark, but that was not the case.
Self-custodial wallets are a method of storing cryptocurrencies like Bitcoin (BTC) without any intermediary. This allows users to have full control over their crypto assets and be their own bank. There are different subtypes of self-custodial wallets, including software-based wallets like MetaMask and hardware wallets like Ledger or Trezor.
DFSA’s assessment aimed to increase awareness of potential regulatory requirements. Despite not being subject to MiCA, some software wallets provide integrated interfaces to fully decentralized services in addition to their wallet services. According to Thygesen, such integrations could potentially be independently regulated by MiCA if they are not provided fully decentralized.