Swiss blockchain company Lykke has teamed up with Amsterdam-based start-up Nxchange, a white-label platform that allows companies to issue and trade equity and bonds, to launch a regulated tokenized securities exchange.
This partnership will create the self-described Europe’s first venue to host traditional financial assets on blockchain technology through security tokens. It also provides a secondary market liquidity for ICO tokens that are offered and sold as securities.
The new platform will leverage the Nxchange’s experience in regulatory compliance and client due diligence in collaboration with Lykke’s blockchain expertise and international reach. The venture creates a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.
In conjunction with the new platform announcement, Lykke has made an investment in Nxchange in return for contributing “investment capital, blockchain technology, crypto asset trading infrastructure and financial engineering expertise to the partnership.”
Both parties are seeking to tap the rapidly emerging asset class of digital tokens which has raised more than $20 billion so far this year, per Coindesk’s ICO tracker. Also making this a huge growth industry, cryptocurrencies overall currently have a current market cap of $212 billion, according to coinmarketcap.com.
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Furthermore, the move is being seen as a response to Europe’s regulators classifying certain digital tokens as securities, and therefore coming under the ESMA’s supervision.
Nxchange has been offering direct trading in securities between companies and investors since 2016. The Europe’s-compliant startup has recently announced partnerships with a list of prominent players in the banking and blockchain industries as it seeks to capture a portion of a huge market class that is waiting to be tokenized.
A well-regulated framework for listing security tokens
Earlier this year, Nxchange has partnered with ABN Amro Clearing service to offer a blockchain-based alternative to escrow accounts for money-management organizations. Back then Nxchange secured a MTF – (Multilateral Trading Facility) licence to further increase the usability of its trading platform in the future.
Lykke is a Swiss blockchain company founded by former OANDA CEO Richard Olsen. The company’s milestones include a successful ICO in September 2016, the unveiling of the Lykke Streams crowdsourcing initiative in November 2016, the addition of SolarCoin and Time coin trading in December 2016, the implementation of offchain settlement in May 2017, and integration with Ethereum in June 2017.
Richard Olsen commented on the news: “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.”
Marleen Evertsz, CEO and founder of Nxchange, added: “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.