Danish bank Saxo has been ordered by Denmark’s financial regulator to shed its own crypto holdings, the authority announced on Wednesday.

The Danish Financial Supervisory Authority’s (FSA) explained that it isn’t legal for banks to conduct such activity as ancillary bank business for reasons of financial stability under current regulations.

“Saxo Bank A/S’ trading in crypto assets for its own account has taken place in order to cover risks in connection with the offering of other financial products,” the statement said. “However, this does not change the fact that the activity, in itself, is not permitted for Danish financial institutions …”

The financial watchdog also said that since the European Union’s crypto regulation, known as markets for cryptoassets regulation (MiCA), only comes into effect from 30 December 2024, the activity is unregulated for the time being.

“Unregulated trading in crypto-assets can create distrust in the financial system, and the Danish FSA considers that it would be unfounded to legitimize trading in crypto-assets,” the statement said.

Saxo bank did not immediately respond to CoinDesk’s request for comment.