Online shopping platforms Shopee and Lazada better watch out as LYKA, a Hong Kong-based fintech firm offering a GEM-enabled, all-in-one ultra app that allows users to connect, sell, discover new things, and share their interests with other individuals, prepares to enter the Philippine market once more through a local subsidiary.
LYKA Philippines, its local affiliate firm, recently urged the Securities and Exchange Commission (SEC) to hasten the approval of its business registration so it can resume operations in the country. The company noted that it has already submitted all the requirements and that on March 8, the SEC already accepted payment worth over P1 million for the local company’s incorporation through its Company Registration and Monitoring Department.
As of this writing, however, the SEC has yet to issue the registration papers of LYKA Philippines saying that the company’s recommendation to establish its wholly-owned subsidiary in the Philippines and for the new entity to register as an Operator of Payment System (OPS) will still have to be brought up to the higher office first.
Cease and desist order
It can be recalled that in July 2021, an order was issued by the BSP for LYKA and its promoter, Digital Spring, to cease and desist from all of its financial transactions and merchant accreditations. LYKA’s motion for reconsideration was denied, with the BSP reiterating that it has to be the mother company itself that should apply for an OPS registration.
Because of the BSP order, LYKA said there will be complications if it tries to settle its merchants as it will violate the provisions of the circular issued by the Monetary Board. This meant LYKA will not be able to cash out the GEMS of the merchants until after the registration has been issued by the SEC.
To settle the issue, LYKA Philippines said it will register as a local company, as recommended by the BSP, and apply for an OPS to lift the cease-and-desist order. The company pointed out that before they can apply for an OPS registration, they need to establish first a wholly-owned local company with the SEC, and for the said entity to register as an OPS with Bangko Sentral ng Pilipinas (BSP). The move, they said, will allow the company to ensure that their obligations with merchant partners are met.
“It is evident that LYKA wants to comply with the requirements set by the Philippine regulatory bodies to establish a company based in the Philippines,” said Ryan Baird, CEO of LYKA, in a press statement.
“Our SEC application has been pending since October 2021. Does it take more than a year to register a new company in the Philippines? Is the pressure coming from our competitors who are threatened by the popularity of our app? The government is making us look bad in the eyes of Filipinos because of such delay. When people call BSP to ask about LYKA’s OPS license, of course, the BSP will inform them that we have no pending applications. But how can we apply if the SEC won’t allow us to register a company first and more so despite acceptance of our payment?” Baird continued to ask.
Growth of ‘Things I Like’ app
LYKA was first launched in Southeast Asia in 2019, but it was previously known as the “Things I Like” application before its apparent rebranding.
Users of the application only need to sign up for the platform and earn GEMs through the use of the app either by posting entries, sharing content, or doing max rating — the equivalent of liking — on other people’s content. They can then spend all the GEMs earned at partner establishments.
LYKA GEMS, its digital gift cards, were previously honored and accepted as payment in more than 28,000 merchants. This includes international brands such as Ford, Maserati, BOSE, and Resorts World, just to name a few.
During the height of the pandemic, LYKA Philippines was able to help millions of Filipinos earn and thousands of its partner merchants survive. However, it seems that the government did not consider all of LYKA’s efforts to comply with the rules and regain its dominance.
LYKA was once ranked third among all social media apps in the Philippines based on average time spent per user, next only to Facebook and TikTok. According to the July 2021 report that was generated from App Annie, a reputable data analytics company, Filipinos used to spend more time in LYKA than on Instagram, Twitter, and Viber combined.