COULD SWEDEN’S TREATMENT OF BITCOIN SET A TREND?
Nordea Bank bans cryptocurrency – and regulator leaves them to it
As Nordea Bank blazes a trail in Europe by banning its employees from trading bitcoin and other cryptocurrencies, the regulator is taking a back seat in a decision-making process it says is better left to the industry.
Sweden’s Financial Supervisory Authority thinks “every institution must decide on the details of their internal regulations specifying the rules for their employees’ investments and trading,” spokesman Peter Svensson said about bitcoin guidelines.
The hands-off approach may surprise some who associate with the Nordic region, and Sweden in particular, with a more activist stance toward regulation. In other parts of the world, authorities are cracking down on bitcoin and cryptocurrencies amid concerns its wild price swings pose a threat to financial stability.
While Nordea’s regulator is not stepping in, the bank’s decision to ban bitcoin trading for its employees may have brought Europe’s finance industry closer to issuing a guideline on the matter.
The European Banking Federation has not yet adopted an official stance on cryptocurrencies, spokesman Raymond Frenken said by phone. But as lenders start imposing their own bans, the organisation may need to come up with one, he said. “If banks like Nordea are going to have a very specific policy on this – and we’re hearing regulators are taking a look at this, including the ECB and central banks – probably it will be that it’s changing. With developments like this, it’s more likely that it will have to be discussed in the context of the European Banking Federation,” Mr Frenken said.
Nordic central banks have been explicit in their characterisations of bitcoin. Lars Rohde, the governor of the Danish central bank, says it is dangerous. Stefan Ingves, the governor of Sweden’s Riksbank, told policymakers on Tuesday he does not think bitcoin can even be considered a currency. Instead, he referred to it as a “speculative virtual asset whose value has no guarantee”.
Financial supervisors are grappling with how to regulate cryptocurrencies, as bitcoin’s recent plunge underscores concerns that its volatility can wipe out retail investors. South Korea may ban cryptocurrency exchanges altogether. The European Securities and Markets Authority says it is monitoring the situation.
Nordea will impose its ban from February 28, after its board agreed to take a stand due to the “unregulated nature” of the market, spokeswoman Afroditi Kellberg said on Monday. The bank had about 31,500 employees at the end of the third quarter. “It is widespread practice across the banking industry to restrict the personal account dealing of staff to prevent them taking positions in speculative investments, or which might expose them to a risk of financial loss and therefore impact their financial standing,” Ms Kellberg said. “Nordea therefore, like all banks, has the right to set out policies in this area that apply to its staff.”
Nordea said its policy “includes transitional provisions for staff with existing holdings and allows for certain exceptions.” Employees who already own bitcoin are “permitted to keep existing holdings”.
Other Nordic lenders are also formulating a position on the matter. Danske Bank, Denmark’s biggest financial group, said it discourages employees from trading bitcoin but has yet to decide whether a full ban is required.
“We’re skeptical toward cryptocurrencies and are advising our employees not to trade
them,” Danske spokesman Kenni Leth said. “We’re currently analysig the situation and time will tell whether there’ll be a formal ban.”
In Denmark, the FSA notes that it has issued a “general warning” to the public about the risks, but says only lawmakers can impose possible curbs. “The question as to whether or not cryptocurrencies should be subject to financial regulation is political,” spokesman Soren Moller Christensen said.
Danske isn’t offering its clients trading in bitcoin or products like it. “Due to lack of
maturity and transparency in the various cryptocurrencies, we have decided not to provide trading of such securities on our various investment platforms,” Mr Leth said. Nordea says its treatment of bitcoin with regard to clients is not a policy as such, “but it’s important to emphasise that it is not something we recommend our customers to invest in.”
Nordea “provides access to trade all securities listed on, for example, Nasdaq,” it said. In practice, this means the bank’s “self-services customers can purchase cryptocurrency-related products through
the platform, but it is important to emphasise that it is not something we recommend.” Nordea chief executive Casper von Koskull voiced his scepticism toward cryptocurrencies back in December.
In an interview in Stockholm, the chief executive called bitcoin an “absurd” construction that defied logic. He also said “there’s a lot of evidence that bitcoin is basically being used for financial crime.”
Nordea said there’s a lack of rules protecting investors, and listed risks ranging from volatility to liquidity and financial crime. “Given these high risks, and in line with our role in the banking industry to maintain high standards of conduct, Nordea is not supportive of staff investing in cryptocurrencies,” the bank said.
With our role in banking to maintain high standards of conduct, Nordea is not supportive of staff investing in bitcoin NORDEA BANK