Danske Bank Reverses 8-Year Crypto Ban, Opens Doors to BTC and ETH ETPs

Danske Bank, the leading Danish lender, has finally lifted its ban on digital assets. It declared that it now allows its customers to invest in Bitcoin and Ethereum exchange-traded products (ETPs) on its online banking platforms. The move is a significant policy shift, as the bank spent nearly a decade avoiding engagement with cryptocurrencies.

Danske Bank Lifts Crypto Restrictions

According to the official announcement, the new product enables users of Danske eBanking and Danske Mobile Banking to gain exposure to BTC and ETH without holding the assets. The bank noted that the move was informed by increasing client demand to have regulated crypto-backed investment products using the conventional financial systems.

This rollout is the first since Danske Bank announced a ban on cryptocurrency-related products in 2018. Back then, the financial institution termed cryptocurrencies as speculative and not suitable for most investors, a position it reaffirmed in 2021.

Danske Bank indicated that customer behavior has evolved dramatically over the past few years. More investors are seeking ways to add crypto exposure to their diversified portfolios. Hence, the bank considered it much safer and more organized to offer ETPs instead of trading in cryptos directly. This move comes despite the current crypto market downtrend, with concerns that Bitcoin may be in a bear market.

Decision Influenced by Growing Client Demand

Head of the Investment products and offering at Danske Bank, Kerstin Lysholm, attested that the increasing interest rate was a major determinant. She said that the number of questions regarding investments in cryptocurrencies has been rising steadily among the bank’s clients.

Lysholm further said that the decision was also influenced by better regulation in Europe. She cited the EU Markets in Crypto-Assets (MiCA) regulation as a turning point. She said that the stronger supervision has contributed to the increased acceptability of digital assets in the mainstream financial sector.

Still, Danske Bank noted that its recommendation of Bitcoin and Ethereum ETFs should not be interpreted as a signal to invest in cryptocurrencies. The bank clarified that it considers crypto to be high risk. Therefore, it will not provide advisory services on digital assets. Rather, the new alternatives are targeted towards self- directed investors alone who are aware of the volatility involved.

Institutional Flows Return

The action by Danske Bank comes as institutional investors in U.S.-based spot crypto ETFs show increased interest. As the data by SoSoValue shows, U.S. spot Bitcoin ETFs had $166.6 million in net inflows on Tuesday. Inflows are now up to $311.6 million for the week and almost cancelled the outflows of the last week, which were $318 million.

ARKShares by ARKB topped off inflows with approximately $69 million, and Fidelity’s FBTC had $57 million. The BlackRock Bitcoin ETF (IBIT) ranked third with almost $27 million in inflows.

The BlackRock Bitcoin ETF performance comes a day after its options milestone. The IBIT options entered the top nine in the U.S. market, taking the lead over gold ETFs.

On the same day, spot altcoin ETFs also had a modest demand. Approximately $14 million in inflows went into Ethereum funds. XRP ETFs gained $3.3 million, and Solana ETFs received around $8.4 million.