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Fintech Firms Face Regulatory Hurdles in Denmark

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Financial technology (fintech) companies operating in Denmark are subject to various regulations and laws that govern their activities, from payment services to crowdfunding and insurance products.

Payment Services and E-Money

Under the Payments Act, fintech firms offering payment services or issuing e-money must comply with EU regulations such as:

  • The Payment Services Directive 2 (PSD2)
  • The E-Money Directive 2 (EMD2)

Additionally, a licence is required for the performance of payment services, as defined in the annex to the Payments Act.

Investment and Crowdfunding

Fintech companies involved in establishing or managing undertakings for collective investment in transferable securities must comply with:

  • The Investment Association Act
  • The EU Undertakings for Collective Investment in Transferable Securities Directive (2009/65/EC)

Those engaged in alternative investment fund management must adhere to:

  • The Act on Alternative Investment Fund Managers
  • The EU Alternative Investment Fund Managers Directive (2011/61/EU)

Fintech firms involved in crowdfunding activities that constitute equity crowdfunding must comply with the:

  • Capital Markets Act
  • EU Market Abuse Regulation (2014/596)
  • European Crowdfunding Service Providers Regulation (2020/1503)

Peer-to-Peer Lending and Invoice Trading

Peer-to-peer lending platforms are not subject to bespoke regulation in Denmark. However, lenders using these platforms must comply with a cap on annual percentage rates at 35 percent for consumer borrowers.

Invoice trading is not regulated specifically in Denmark, but factoring arrangements may trigger registration requirements with the Financial Supervisory Authority and anti-money laundering compliance obligations under the Anti-Money Laundering Act.

Insurance and Credit Information

Fintech companies selling or marketing insurance products must obtain a licence from the Danish Financial Services Authority (Finanstilsynet).

Those involved in insurance distribution require a licence for insurance mediation.

Credit information services and credit information bureaus must adhere to EU data protection regulations and seek a licence from the Danish Data Protection Agency prior to commencing any data processing.

Compliance is Key

As Denmark is an EU member state, fintech firms operating in the country must comply with EU regulations and directives that govern their activities. Failure to do so may result in regulatory fines or penalties, as well as reputational damage.

“It’s essential for fintech companies to understand the complex regulatory landscape in Denmark,” said [Name], a financial services expert. “While there are many rules and requirements to navigate, compliance is key to ensuring the integrity of the financial system and protecting consumers.”

By understanding the regulations that apply to their activities, fintech firms can ensure they operate in a compliant manner and capitalize on the opportunities offered by Denmark’s thriving fintech sector.