Lykke Heat from the Global Street, May 2017
As summer gets underway in the Northern Hemisphere—and winter returns to the Southern Hemisphere—we thought it time for some status reports from our movers and shakers among the global elite. These men are busy making the world safe for Lykke, but they took a few moments to apprise us of our standing.
We’re monitoring progress on multiple fronts, with plenty of news to report:
• EU broker license. Our application for a Cyprus Investment Firms license for Lykke Cyprus Ltd. is on the fast track at CySEC, the Cyprus Securities and Exchange Commission. We recently received a letter from CySEC containing general questions about Lykke and requests for additional documents. The team is hard at work preparing our official response.
• EU EMI license. Our Electronic Money Institution application is ready to be submitted to the Central Bank of Cyprus, including the capital requirement of €350,000. Lykke EMI is engaged with various banks to support our payment processing strategy. New systems and controls are now in place, pending activation of electronic payments.
• UK MTF license. The Multilateral Trading Facility package is facing some new delays due to the updated FCA requirements for UK-based MTF. We are updating our IT Strategy document and the application package to match the new requirements of the FCA.
• Margin trading update. The final release of the Lykke platform for margin trading is scheduled in June for a limited list of jurisdictions under Vanuatu's Dealer in Securities license. Traditional leveraged FX and CFD products will be extended by BTC and ETH trading.
The United States has a fragmented regulatory environment, in that different products are overseen by different regulators. Each regulator, in turn, has different levels of approval, depending on regulatory history and segregated capital.
Lykke’s approach is like climbing a ladder. We will get approval for the lowest levels first. Then we can progress to higher and higher rungs. This takes time, but it’s the best way to achieve our goals.
Applications have already been submitted to the SEC, the U.S. Treasury, and the IRS, with the CFTC and OCC to follow shortly. We expect our first approvals for a very limited set of products by the fall. Each quarter, we expect to add more and more products as approvals come in. By the end of 2018, we should be able to trade everything that Lykke offers.
Venky Sethuraman has joined the Lykke team in Singapore. As a former Managing Director in Equities with Standard Chartered, and prior to that as the Head of Asian Equities at Citibank, Venky brings valuable institutional experience that we can leverage across the region.
We are in the final stages of choosing legal counsel to assist us with our Singapore regulatory applications for launching a fully tokenized securities exchange. This would enable us to handle security-related ICOs and ITOs as well as providing a venue for secondary trading. It has been challenging to find firms that have an in-depth understanding of tokenized assets, but we have managed to narrow it down to a strong short list. Given that the local Singapore retail market is relatively small, our initial licensing will be for accredited investors and institutions, as this will enable us to provide services to the large institutional pools of private wealth in Singapore. Once the application process has begun, we expect the process to be completed in roughly 8–10 months. We will look to partner with local incumbents to tap into the Singapore retail market.
As we prepare our regulatory applications for securities trading, we expect to roll out crypto and tokenized FX products in 3–4 months, assuming that it will not jeopardize our regulatory applications. Counsel will advise on this matter in the near term.
The launch of the Singapore wallet will enable all retail investors to access FX and cryptocurrencies, while securities, once we obtain regulatory approval, will only be available to accredited investors. We are in the process of working with compliance partners to map our AML and KYC policies to the standards of the Monetary Authority of Singapore and ensure that our terms and conditions are consistent with Singapore law. We expect to announce a launch date in the coming month.
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