Debitum Network applied for the investment firm’s license in Latvia (updated)

Debitum applied for the investment firm’s license in Latvia:

We proudly present that Debitum joined a few online investment platforms from Latvia, who have announced an application for the investment firm’s license. The required documents, including a detailed business plan, descriptions of various processes and procedures, and other necessary documentation, were submitted to the Latvian financial market regulator Financial and Capital Market Commission (FCMC) on April 8, 2020.

Why is it important?

We have been discussing licensing with the local regulator for nearly a year now. We understand that local or EU level regulator will regulate the industry of online investment platforms (loan funding and loan re-selling) in one way or another. There were various options and Debitum, similar to a few other platforms like Mintos, Twino, and Viventor decided to opt for the investment firm license in Latvia.

The regulation provides a more structured legal framework for the operations of the platform, ensures government monitoring and auditing of all platform operations. It also guarantees specific roles and responsibilities within the operator of the platform that allows ensuring better investor protection, for example, independent internal auditor and compliance officer.

This step will allow Debitum better access to professional and institutional investors as they prefer collaborating with a regulated financial service provider. We believe the regulation will help with further growth of the platform.

What is going to change?

Most importantly, retail investors will be eligible for investor protection measures as stipulated in Latvian and EU law. A major one is that, in particular cases, an investor is entitled to a compensation of up to 90% of the defaulted amount but not more than 20’000 EUR. Such protection measures will enhance the safety principle of the platform.

Besides, we are planning to provide two types of investment opportunities:

• investments in one by one loan similar to the current offer,
• an option to invest in a security that is backed by a portfolio of individual loans (based on geography, loan type, risk class and similar).

Certain functionality or level of detail of the platform might change, but it will be reviewed and agreed with the regulator during the licensing process.

What are the other plans for the future?

After the licensing, we will review if Debitum could offer any additional services to our users while maintaining the spirit and integrity of the platform and while providing additional value. A potential service could be the ability to buy various public or private corporate bonds.

We also plan to use an EU license passporting mechanism to formally register our license with other EU countries, thus allowing investors to directly address any issues with the local regulator of their home country.

What is the current status of the process? (as of March 2021)

Debitum has successfully reached all major milestones regarding the licensing process. We have transferred all operations to a new entity and started implementing necessary features on the platform. Our investors can expect little changes to the verification procedures as this is the only remaining milestone before acquiring the license. In other words, AML and KYC processes and procedures finalization is the last step before the success. Taking this in consideration, we expect to receive the license in the end of April or early May. Our team is working hard to ensure that the license is acquired by the end of April.

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We have reached an important milestone in our journey, and we welcome you to be excited together with the whole Debitum team!