Denmark Proposes Ban on Self-Custody Bitcoin Wallets and DeFi Platforms

Denmark has proposed new regulations that could potentially ban self-custody Bitcoin wallets and other decentralized finance (DeFi) platforms. The Danish Financial Supervisory Authority (DFSA), which oversees cryptocurrency activities to ensure compliance with financial regulations and prevent money laundering, aims to address unregulated crypto activities by banning unregulated wallets. This move has faced criticism but is seen by the DFSA as necessary to close gaps in DeFi regulation.
If implemented, these regulations would conflict with the EU’s Markets in Crypto Assets (MiCA) guidelines and the US’s stance on Bitcoin self-custody wallets. MiCA regulations, effective from December 2024, do not cover the DeFi sector and have been critiqued for potentially stifling innovation. Estonia, another EU member, has already implemented similar rules, potentially setting a precedent for Denmark and other EU countries.
In contrast, the US has chosen to study DeFi through its crypto infrastructure bill FIT21 instead of imposing immediate regulations. The DFSA is currently seeking feedback from stakeholders on its proposals. If Denmark’s regulations are adopted, it would mean that offering Bitcoin wallets, DEX interfaces, or token-related services without regulation in Denmark would be prohibited.