Evolve Markets

ISOLAS advises LMAX Digital in obtaining DLT License for crypto exchange

ISOLAS advises LMAX Digital in obtaining DLT License for crypto exchange

Leading blockchain law firm, ISOLAS LLP, in mid-April advised institutional cryptocurrency exchange, LMAX Digital, in receiving its full license as a Distributed Ledger Technology (DLT) Provider from the Gibraltar Financial Services Commission (GFSC).

LMAX Digital is operated by LMAX Exchange Group, an independent operator of FCA regulated trading venues for electronic trading of foreign exchange, metals and indices.

Based on LMAX Exchange’s proven, proprietary technology, LMAX Digital was built in response to the group’s institutional clients who wanted a credible, efficient and trusted platform with high-quality deep liquidity, on which to trade digital currencies with like-minded institutions.

It was launched in May 2018, becoming the first cryptocurrency exchange established by a regulated FX exchange operator and the only deliverable cryptocurrency exchange dedicated to institutional clients.

The recently granted license confirms LMAX Digital is compliant with the nine regulatory principles set out in Gibraltar’s DLT regulations, designed to protect consumers and businesses using digital assets stored or transmitted on distributed ledgers.

These regulatory principles include robust risk management processes, effective corporate governance, high standards of customer care, systems and security controls criminal activity, and adopting standards of honesty and integrity.

Emma Lejeune, Partner at ISOLAS who led on the transaction, said, “We are delighted to have assisted LMAX Digital Broker Limited in obtaining their DLT license.  It has been an absolute pleasure working with such a great team at LMAX during this process. Having an established and well-reputed group like LMAX regulated as a DLT provider in Gibraltar adds significant value to the evolving industry. It is also a testimony of the high caliber of applicants seeking to be regulated in the jurisdiction.”

Joey Garcia, the Partner at ISOLAS who heads up the firms Fintech practice, commented, “The objective of the DLT framework has always been to develop a purpose-built appropriate regulatory framework that not only provides regulatory certainty for firms using nascent technology for dealing with new asset classes but also seeks to protect the interests of the users of those businesses. We have always aimed to set an extremely high bar to entry and in that context, it’s a pleasure to have worked with LMAX as such a high caliber group in meeting all of these requirements, and a pleasure to welcome the group to Gibraltar.”

Jenna Wright, Head of LMAX Digital, explained, “The GFSC is leading the way in global regulation of the cryptocurrency market and their approach mirrors LMAX Digital’s values. With support from Joey and Emma, it was clear that the Gibraltar regulator has recognized our role in further diversifying institutional currency markets and we look forward to working alongside them and other regulators to help improve understanding of the methods of trading cryptocurrencies. It was great working with the team ISOLAS who brought a high-level of expertise of the blockchain and crypto space to this transaction. LMAX Digital launched less than 12 months ago and in that short time, we have been delighted with the positive response from institutional market participants. The number of clients using LMAX Digital has quadrupled since Q2 2018 and trading volumes have grown 126%, resulting in gross revenues also increasing 131%. Having built up a strong institutional following, we are in an excellent position to capitalize on the opening up of cryptocurrency markets to major global financial institutions.”

Since the introduction of DLT licenses in Gibraltar on January 1st, 2018, ISOLAS has worked on the majority of applications. Recent work has included supporting Coinfloor, which received the very first DLT license in Gibraltar, and, more recently, Huobi. ISOLAS also advised RSK on its protocol layer developments, the prediction market platform Gnosis, Xapo on its e-money license and the Gibraltar Stock Exchange GSX on its development through the Gibraltar Blockchain Exchange (GBX).

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