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As of November 5th 2018, Lykke has partnered with Nxchange to build a fully compliant security token exchange in Europe. Nxchange has significant experience with European regulatory bodies which will be combined with Lykke’s technology to launch the platform.
Lykke is a Swiss digital asset exchange which offers the secondary marketing trading of more than 80 cryptocurrencies as well as margin trading. Nxchange functions as a Regulated Market and Multilateral Trading Facility securities exchange platform. It has offered direct trading in securities since 2016 and is regulated by both the Dutch Ministry of Finance and the Netherlands Authority for the Financial Markets, which is comparable to the United States’ SEC.
Through the new partnership, the two will combine their experience to establish a fully regulated security token exchange in Europe. The platform is planned to feature tokenized equities, bonds, loans, and various investment products. The tokenization of such securities offers many benefits when compared to traditional securities, as explained in our security token guide.
According to the terms of agreement, Lykke is set to become an equity shareholder in Nxchange after contributing investment capital, blockchain technology, digital asset trading infrastructure, and financial engineering know-how. The regulatory expertise of Nxchange aims to assist in establishing full compliance for safe and regulated trading.
Richard Olsen, founder of Lykke, emphasized the importance of compliance as blockchain technology becomes increasingly adopted:
“The increasing acceptance of digital assets and blockchain infrastructure as the technology of the future correctly comes with a greater emphasis on regulation and compliance. This partnership envisages to satisfy all these things while still bringing all the benefits of transformative technology to any individual who wishes to access or exchange anything of value.”
The announcement is not the only major partnership in the recent timeline of Nxchange. They partnered with ABN Amro clearing service in February 2018, which allowed them to offer a blockchain-based alternative to escrow accounts for money-management organizations.
Their priority of regulatory compliance has likely played a large factor in attracting such partnerships. Just recently, ESMA— the European Union’s securities watchdog— was requested to clarify their definition of “transferable security” after the many troublesome ICOs of 2017. The SEC currently faces similar requests from Congress.
Yet with the tokenization of securities, much of the worry fades away. Financial securities have pre-existing laws— if they can be enforced through smart contracts and algorithms through tokenization, then security tokens have no concern with the global ambiguity of digital asset regulatory guidelines.
Nxchange founder and CEO, Marleen Evertsz, believes that both the clear regulations and revolutionary benefits will result in security tokens as the next breakthrough in capital markets:
“We believe that the time has come for a more modern form of capital market transactions: efficient, real-time, 24/7, transparent, and supported by compliance procedures that assure maximum security. We are delighted to partner with Lykke and to join forces in building the Next Generation Stock Exchange.”
What do you think of the partnership between Lykke and Nxchange? Will this platform become the leading security token exchange in Europe? Let us know what you think in the comments below.