Lykke Wallet Security Measures

Security is a trending topic in the blockchain industry: How to protect your funds against hackers? How to store the private key? Who should be responsible if a DeFi platform is hacked? These and many other questions related to security issues cause a headache both to the cryptocurrency service providers and their clients. With the market maturing, a lot has been learnt by trial and error. Past hacker attacks have forced the venues to improve their security measures. At the same time, as the number of cryptocurrency users has multiplied across the globe, the regulators started taking steps towards creating a legal framework that should give more security and guarantees to traders and investors. Lykke is committed to guaranteeing the highest standards of security for its users At Lykke, to ensure that our system is secure and free from illegal activities, we combine both the technical security measures and the highest compliance standards. On the compliance side, there’s a number of measures that allow us to create a safe trading environment in which our clients can be sure not to be unknowingly involved in money laundering or similar crime. The three tier KYC Lykke has a three tier Know Your Customer verification system. When a new customer downloads the app or registers to use the web terminal, they start immediately at the first tier. The first tier allows the user to explore the app and see what cryptocurrencies and national currencies are available for trading. However, at tier one you cannot deposit funds or trade. The second tier is the one that allows you to start depositing money and trade cryptocurrencies. The procedure to upgrade to the second tier is very easy and fast: you just need to get your ID, selfie, and proof of address verified. All these data are safely stored in our system. At the second tier, you can trade all available pairs with zero trading fees and make crypto and fiat withdrawals within the monthly approved limit. The third tier allows professional traders to extend their monthly deposit limits. To get approved for the third tier the users have to submit a Source of Funds document. AML & CFT Anti-Money Laundering and Combating the Financing of Terrorism regulations are an important component in a crypto exchange’s security architecture. Since the very beginning, Lykke has maintained high standards in the fight against money laundering and financing terrorism. From this point of view, Lykke has become an example in the crypto space and the fintech industry both in Switzerland and on the European level. Lykke collaborates with Chainalysis to identify and report suspicious transactions within the AML and anti-crime legal frameworks. Chainalysis is a recognized leader in the industry in which we trust to perform due diligence risk assessment for our on-chain transactions. Our high AML & CFT compliance standards is what gives our users the peace of mind because they know that they do not trade against persons or entities involved in illegal actions. The OpenVASP initiative In March 2021, the Financial Action Task Force (FATF) released a package of proposed updates to its 2019 regulations. In summary, the proposals suggest considering DeFi protocols and stablecoins’ operators as Virtual Asset Service Providers (VASPs). This implies that such non-custodial service providers will also have to comply with AML and CFT regulations. The core idea of such regulations is the traceability of transactions, commonly known as the “Travel rule”. Under the Travel Rule, the service providers have to record and exchange the ID data of the originators and beneficiaries of all transfers of digital funds to enable traceability of transactions. In July 2021, the European Commission came out with a similar proposal, aiming at extending the European AML / CFT regulations to all cryptocurrency service providers and not just certain categories that fall under these regulations at the moment. The main idea of the proposals is to make all crypto transactions traceable and ban anonymous custodial cryptocurrency wallets. In other words, the European Commission is advocating introducing on the European level a sort of a Travel Rule and extending its application to a wide range of cryptocurrency service providers. However, these developments are not a surprise for cryptocurrency companies and their compliance teams. At the end of 2019, Lykke, together with other three Swiss blockchain industry leaders - Bitcoin Suisse, SEBA, and Sygnum - created a working group to develop an open source technological solution necessary to comply with the Travel Rule regulations. This is how the OpenVASP association was born. At the moment, the association comprises more than a dozen of industry leading members and offers a fully-functional protocol that enables the Travel Rule compliance within the OpenVASP network. Security Measures from the technical point of view Apart from creating a safe environment in the cryptocurrency marketplace, Lykke offers its clients a cryptocurrency exchange platform with a robust architecture and enhanced security measures to access it. Lykke is a centralized exchange, which means that the users’ trading wallets are custodial. To protect the funds in Lykke’s custody, we implement such standards as encryption of the hot wallet keys and constant monitoring against potentially harmful activities. Moreover, the users’ funds are protected by ensuring that the access to the user’s wallet is only possible through a two-step authentication process. Setting up your account and secure trading Even if trading through a web terminal at a big screen is handier, you need your mobile device to generate your private key. Moreover, your encrypted key is stored on your mobile device. When setting up the account for the first time, the user has to fulfill the following steps to ensure the access to the wallet is secure. You will need your cell phone to perform these operations: Create a password and a PIN code and safely store them offline. Verify your cell phone number and your email address. These data are essential for you to access your wallet. Put down and safely store offline the 12-word seed that represents your encrypted private key. These words are also needed to change the password or PIN, and it can be done only from the mobile device. In case you don’t want to use your cell phone to confirm transactions when trading at the web terminal, you can set up a Google two factor authentication access. At Lykke, we are committed to creating a safe and crime-free trading environment together with maintaining high security standards on the technical side of the question.  Download the Lykke Wallet App and start secure crypto trading now!

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Anonymity versus regulation in cryptocurrency trading: what’s the trend?

With mass adoption, hopefully, around the corner, a smaller and smaller proportion of the growing cryptocurrency user base knows where the debate about anonymity - regulation comes from. At the same time, cryptocurrency anonymity is actually a concept that underlies the whole crypto movement. Early in the 1990-es, the first seeds of the idea that technology can help people retrieve the control over their privacy were dropped into the fertile soil of the Cypherpunk circles. It was a group of people interested in cryptography, computer science and technology, but not only. In the cypherpunk mailing list, a sort of an early days Internet forum, the trending topics also concerned philosophical questions, democracy, privacy, the financial system and how their inherent inefficiencies could be fixed thanks to technology. Among them, there was the issue of middlemen corporations that had assumed the function of guaranteeing trust in peer-to-peer transactions.  The cypherpunks discussed the idea of eliminating the middleman thanks to cryptography and immutability of transaction records that would make trust-less relations between peers possible, restoring their full control over their privacy. The birth of most cypherpunk main ideas and concepts is usually associated with the name of cryptographer David Chaum, creator of DigiCash. As early as in 1985, he authored the paper “Security without Identification: Transaction Systems to Make Big Brother Obsolete” where anonymous digital cash and reputation systems were first mentioned and described. It took more than twenty years for these ideas to find their way into the Bitcoin whitepaper: “The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third-party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the "tape", is made public, but without telling who the parties were” (Bitcoin whitepaper, p. 6, https://bitcoin.org/bitcoin.pdf). The idea of making “Big Brother Obsolete” appeared to be appealing also to those who aimed rather at bypassing Big Brother for other reasons. The anonymity of transactions is definitely an asset for those whose transactions, if traced, could cause them trouble. This is how in the early days, cryptocurrencies attracted users involved in money laundering, crime, or tax evasion. However, in the case of Bitcoin, in particular, anonymity is an illusion. Bitcoin is pseudonymous, which means that the user’s identity is represented by an alphanumeric code, which is the public address. All transactions between these public addresses are registered in an open and public register, the blockchain ledger. And even if the public address is the only information available, law enforcement agencies have their ways to track this address. Moreover, if the wallet is custodial, it is even easier to trace the real identity of the user. Indeed, when law enforcement authorities started investigating criminal transactions in the blockchain, it appeared to be a golden mine since all transactions are recorded publicly and are immutable. Probably, there still may be ways to maintain privacy on the Bitcoin blockchain, but it’s a dungeon sieged by the regulators with increasing success. While Bitcoin is a pseudonymous cryptocurrency, some others are designed and developed as totally anonymous, something that in the conditions of cryptocurrency adoption growing causes real headache to governments and the traditional financial system. While technological advantages of cryptography are certainly recognized at all levels, the balance between privacy and security remains an unresolved dilemma.  What does the future hold for the "anonymity VS regulation" dilemma? Last week we asked our Twitter users whether they were on the anonymity or the regulation side and the distribution was the following: Anonymity - 34,5% Regulation - 34,5% In the middle - 30,9% When analyzing possible developments, it’s important to distinguish between what is possible and what is probable. While everything is possible in this nascent cryptocurrency market, what is probable is that the traditional financial system will end up absorbing blockchain technology while molding its underlying principles to suit the existing framework. For what Lykke is concerned, since the very foundation, we envisioned blockchain technology as a solution able to level the playing field on the financial market for all kinds of players and, importantly, to digitize any object of value by creating a corresponding crypto token. If a digital asset represents an object of value, it is clearly a security. In the current framework, securities, even if digitized, are subject to regulation. This is the reason why, from the very beginning, Lykke embraced the vision of regulation compliance as a necessary component for the crypto industry to gain mass adoption. As if confirming our early days predictions, the European authorities have been consistently taking steps to create a legal framework for the nascent blockchain industry. At the moment, the trend is expanding the existing regulation principles, which means that the rules applicable to fiat currencies start applying to digital assets as well. Among the latest regulations it is worth mentioning the New DLT Law in Switzerland and the developments around the Travel Rule in the European Commission. New DLT Law in Switzerland The Swiss Financial Markets Supervisory Authority (FINMA) has been showing itself quite open-minded and proactive in fostering the development of the fintech industry in Switzerland. Indeed, since 2018, the government has launched a Crypto-Initiative and set up a working group for blockchain and initial coin offering (ICOs). The new legislation being designed is deliberately technology neutral. The latest innovations regarding blockchain technology are comprised in the Distributed Ledger Act whose first part entered into force in February 2021 and the second part is expected on Aug 1, 2021. The innovations concern mostly the DLT-based securities and the underlying rights of the investors. In addition, the act addresses the segregation of DLT-based assets in the event of a custodian’s bankruptcy. In summary, the existing legal framework is being extended to comprise various forms of DLT and digitized assets.  The EU intentions to impose the Travel Rule on VASPs The famous tweet by Mairead McGuinness, the E.U. Commissioner for Financial Services, had the crypto community spend lots of ink on discussing what the upcoming measures were going to be. In reality, it appears that the new rules are going to be similar to the existing FATF’s Travel Rule guidelines. They aim at prohibiting providing anonymous services, such as third-party crypto custody or exchange accounts, but not the provision of software for self-custody. The understanding that the Travel Rule, a provision that requires financial institutions to utilize users’ identifiers in all transactions, would eventually be extended to crypto transactions has been on the scene since long ago. Indeed, the industry has been developing technical solutions to be prepared for such a regulation to come into force. One of such solutions is the OpenVASP initiative. The OpenVASP is a decentralized protocol that came in response to the Financial Action Task Force (“FATF”) 2019 crypto industry travel rule guidance. The initiative came together thanks to the collaboration of the founding members Bitcoin Suisse, Seba Bank, Sygnum, Avaloq, MME and Lykke. The open protocol works very similar to the SWIFT messaging system, relating to the transfer of sender and beneficiary information during blockchain transfers between virtual asset service providers (“VASPs”). As one of the founding members, Lykke has developed a solution to address precisely the Travel Rule requirements - The VaspSuite - that enables the travel rule compliance with a messaging system designed specifically for crypto. At Lykke, we view compliance not just as an opportunity to serve our customers maintaining the highest security standards but also as an opportunity to raise the bar for the overall industry. To summarize, crypto is a very interesting and intriguing subject with very progressive ideas lying behind various projects. Some of them have chosen the strategy of integrating with traditional finance, others are working on disrupting it with authentic DeFi solutions. Technology makes radical innovation possible, but is society ready for it?

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Crypto exchange with 0 fees: a level playing field

Lykke Wallet is a blockchain-powered commission-free platform for cryptocurrency trading and forex, on which all exchange operations are executed without fee. At Lykke Wallet, users can trade with zero fee some 50+ cryptocurrencies including Bitcoin and 20+ forex pairs starting from as low as a 1 euro deposit. The 0 crypto fee policy is valid both for retail or corporate and API traders, who can take advantage of the zero taker and maker fees to execute their trading strategies. The very fact that Lykke Wallet is a free cryptocurrency trading platform, makes it different from the majority of other crypto exchanges with lowest fees. Indeed, we consider that the 0 trading fees are an important step in democratizing finance through blockchain and here’s a number of reasons why.

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How to buy Cryptocurrency with Swiss Francs (and without Fees)

Are you wondering where and how to buy cryptocurrencies with Swiss francs with as low fees as possible? In this article, we will explain to you how to buy Bitcoin and other top crypto currencies directly with CHF and with no trading fees at Lykke Wallet.

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Picking Richard’s brain

Richard is a pioneer in high-frequency finance. With Lykke, he pursues his ambition to transform financial markets into a seamless ecosystem resolving the inefficiencies of the current financial system. 

In the first segment of this short interview, Richard shares with us his views on financial markets’ fairness, the key factors for success in trading and API trading.

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Algorithmic Trading

Do you trade with a plan? How many times have you gone back on your trading plan? Was it worth it? Well.. perhaps it is time you go full on with API trading. Continue reading while we digest some of the common issues and address some of the benefits of setting up your trading bot with Lykke.

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Lykke Wallet Security Measures

Security is a trending topic in the blockchain industry: How to protect your funds against hackers? How to store the private key? Who should be responsible if a DeFi platform is hacked? These and many other questions related to security issues cause a headache both to the cryptocurrency service providers and their clients.

Continue reading

Anonymity versus regulation in cryptocurrency trading: what’s the trend?

With mass adoption, hopefully, around the corner, a smaller and smaller proportion of the growing cryptocurrency user base knows where the debate about anonymity - regulation comes from.

Continue reading

Crypto exchange with 0 fees: a level playing field

Lykke Wallet is a blockchain-powered commission-free platform for cryptocurrency trading and forex, on which all exchange operations are executed without fee. At Lykke Wallet, users can trade with zero fee some 50+ cryptocurrencies including Bitcoin and 20+ forex pairs starting from as low as a 1 euro deposit. The 0 crypto fee policy is valid both for retail or corporate and API traders, who can take advantage of the zero taker and maker fees to execute their trading strategies. The very fact that Lykke Wallet is a free cryptocurrency trading platform, makes it different from the majority of other crypto exchanges with lowest fees. Indeed, we consider that the 0 trading fees are an important step in democratizing finance through blockchain and here’s a number of reasons why.

Continue reading

How to buy Cryptocurrency with Swiss Francs (and without Fees)

Are you wondering where and how to buy cryptocurrencies with Swiss francs with as low fees as possible? In this article, we will explain to you how to buy Bitcoin and other top crypto currencies directly with CHF and with no trading fees at Lykke Wallet.

Continue reading

Picking Richard’s brain

Richard is a pioneer in high-frequency finance. With Lykke, he pursues his ambition to transform financial markets into a seamless ecosystem resolving the inefficiencies of the current financial system. 

In the first segment of this short interview, Richard shares with us his views on financial markets’ fairness, the key factors for success in trading and API trading.

Continue reading