Crypto-funded debit card in Denmark

Lov om forebyggende foranstaltninger mod hvidvask og finansiering af terrorisme (hvidvaskloven) – The Money Laundering Act.

This is the core Danish law that transposes the EU's 4th, 5th, and 6th Anti-Money Laundering Directives (AMLDs).

Exchange between virtual currencies and fiat currencies.

Are custodian wallet providers.

Identification and Verification of the Customer:

Natural Persons: Obtain and verify the customer's identity (full name, address, date of birth, national identification number if applicable). Verification must be based on reliable, independent sources (e.g., valid passport, national ID card, driving license combined with proof of address).

Identification of Beneficial Owners:

VASPs must identify the ultimate beneficial owner (UBO) of all legal entities and trusts. A UBO is typically any natural person who directly or indirectly owns or controls more than 25% of the shares or voting rights, or otherwise exercises control.

VASPs must conduct an enterprise-wide risk assessment (§ 7 of Hvidvaskloven) to identify, assess, and understand the money laundering and terrorist financing risks associated with their customers, products, services, transactions, and geographic areas.

Enhanced Due Diligence (EDD): Required in situations presenting a higher risk of money laundering or terrorist financing. This includes:

Customers who are Politically Exposed Persons (PEPs) or their family members/close associates.

Customers from high-risk third countries (as identified by the EU or FATF).

Situations where the customer is not physically present for identification.

VASPs must continuously monitor the business relationship, including scrutiny of transactions undertaken throughout the course of that relationship, to ensure that the transactions are consistent with the VASP’s knowledge of the customer, their business, and risk profile (§ 13 of Hvidvaskloven).

Customer information and risk profiles must be kept up-to-date.

EMTs are explicitly classified as a specific type of crypto-asset within MiCA, but their issuance is restricted to entities already authorized as credit institutions or e-money institutions under the E-Money Directive 2009/110/EC (EMD2). MiCA effectively extends and adapts EMD2 rules for EMTs.

Only credit institutions (banks) authorized under the Capital Requirements Directive (CRD IV) or e-money institutions authorized under EMD2 can issue EMTs.

These entities must also notify their competent authority (Finanstilsynet in Denmark) and comply with specific MiCA requirements related to EMTs.

Titles III (ARTs) and IV (EMTs) of MiCA apply from June 30, 2024.

The remaining provisions of MiCA apply from December 30, 2024.

Speculative Intent: A cornerstone of Danish crypto tax is the assumption of "spekulationshensigt" (speculative intent). SKAT generally assumes that individuals acquire cryptocurrency with the intent to profit from price fluctuations. This means that gains from the sale or exchange of crypto are almost always taxable, and losses are generally deductible.

Therefore, the combined marginal tax rate on crypto gains can be up to approximately 52-56%, depending on your municipality and total income.

FIFO (First-In, First-Out): For individuals, SKAT mandates the FIFO principle for calculating cost basis when selling or exchanging cryptocurrencies. You cannot choose LIFO, average cost, or specific identification. This is a crucial detail.