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Introduction to SAFT The Simple Agreement for Future Tokens (SAFT) is a contractual mechanism designed for the issuance of digital tokens in the future, typically used by blockchain projects to raise funds from investors. It acknowledges the purchase of tokens that will be delivered at a later date, usually linked to a token generation event (TGE). Legal Provisions to Strengthen SAFT Definitions and Interpretations: Define all terms and relevant blockchain terminologies such as "Tokens," "Blockchain," "Blockchain Address," "Token Generation Event," and "Vesting Period" to avoid ambiguity. Token Issuance and Delivery Conditions: Specify the conditions under which tokens will be issued, including any prerequisites such as payment completion and compliance checks. Define the consequences of failing to meet these conditions, including the potential for the agreement to be voided. Clearly state the deadlines for token delivery and the actions to be taken if tokens are not delivered by the specified date, including any rights of the purchaser to terminate the agreement. Specific Rights and Limitations on Tokens: Tokens may be defined not as securities but as functional digital units that allow interaction within a protocol. The token classification influences their regulatory and legal treatment. The SAFT should specify conditions under which tokens may be considered securities and detail the restrictions on their transferability. This includes the conditions under which tokens can be sold, resold, or transferred, potentially subject to registration or exemption under securities laws. Vesting and Cliff Periods: Include vesting schedules that specify when the tokens will become available to the purchaser post the Token Generation Event (TGE). Outline any cliff periods during which tokens do not vest, specifying the duration and the conditions under which tokens begin to vest post-cliff. Rights and Obligations of Parties: Clarify the rights and obligations of both the issuer and the purchaser, particularly relating to the issuance, handling, and potential return of tokens. Ensure that the agreement specifies the issuer's and purchaser's limitations, especially regarding the transfer and sale of tokens. Limitation of Liability and Indemnities: Include clauses that limit the company's liability for issues not within its control, such as blockchain malfunctions or cybersecurity breaches. Delineate indemnification provisions, protecting the company against breaches of the agreement by the purchaser. Confidentiality and Data Protection: Incorporate confidentiality clauses to protect the sensitive information of all parties involved. Comply with data protection laws, specifying how personal data will be handled, stored, and protected under the agreement. Termination and Survival: Define specific conditions under which either party can terminate the agreement. Ensure that key provisions such as confidentiality, liability, and indemnity survive the termination of the agreement. Representations and Warranties: The company should make representations about its legal authority to enter into the SAFT, the non-infringement of third-party rights, and compliance with relevant laws. The purchaser must represent their eligibility as an accredited or qualified investor and confirm their token purchase's legal and regulatory permissibility. Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) Compliance Outline the procedures for verifying purchasers' identities through KYC (Know Your Customer) and KYB (Know Your Business) checks to comply with AML and CFT regulations. Specify requirements for proof of identity, address, source of funds, and checks against sanctions and politically exposed persons (PEPs). Jurisdiction and Dispute Resolution: State the governing law and jurisdiction for the agreement, providing guidelines on how disputes will be resolved. Include arbitration or mediation provisions before or instead pursuing litigation, specifying the rules and location. Digital Signature and Electronic Delivery Confirm that digital signatures are recognized as valid and binding, equivalent to traditional handwritten signatures. Detail the process for electronic delivery of notices and other communications, ensuring they are considered received when delivered electronically. Risk Disclosures for SAFT The SAFT should highlight critical risks such as irreversible token loss from private key misplacement, financial jeopardy from cyber threats, and token malfunctions due to blockchain failures. Market risks include limited liquidity due to lack of secondary market support and significant price volatility from market and regulatory changes. Regulatory uncertainties could lead to adverse legal and tax implications, requiring investor diligence. Investment risks are heightened by the lack of insurance, potential issuer dissolution, and possible underperformance due to inadequate protocol development. Legal provisions should mandate investor acknowledgment of these risks, include disclaimers about the speculative nature of tokens, and require affirmations of understanding related to regulatory and tax responsibilities. *** For expertly crafted SAFT templates that address all legalities look no further than Prokopiev Law Group. Engage with our tailored legal services to ensure your token issuance complies with current regulatory frameworks and secure your future. Contact Prokopiev Law Group today to receive your personalized SAFT template, tailored to meet the unique needs of your blockchain project. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

In March 2024, the UK's financial watchdog, the Financial Conduct Authority (FCA) issued a press release, which is giving out new Guidance (“Guidance” or “Guidelines”) for financial services promotion. These new Guidelines aim to prevent scams and ensure people are making informed decisions about their finances. It applies to all online financial promotion, including the increasingly popular world of memes, TikTok and YouTube videos, and even Livestreams. The comprehensive nature of the Guidance, which supersedes the previous guidance (FG15/4: Social media and customer communications), is designed to ensure all parties involved in promoting financial products or services online are aware of their responsibilities. This includes authorized firms, social media influencers, and even affiliate marketers. Trade bodies representing these groups are also expected to be familiar with the updated guidelines. All financial promotions must empower consumers to make informed decisions. This means firms need to consider the target audience, the advertised product's complexity, and potential areas of confusion that might arise. The Guidance extends its reach beyond authorized firms to encompass unauthorized persons as well. Social media influencers who promote financial products or services are now responsible for ensuring their communications comply with FCA rules. This may involve obtaining approval from authorized firms for their promotional content. The FCA also clarifies that even communications on "private" social media channels like Discord or Telegram can be considered financial promotions if they encourage investment activity. This broadens the scope of the FCA's regulations and requires firms to be mindful of their communications across all platforms. Here are the key takeaways from the FCA's updated guidance, broken down by the relevant sections of the Guidance: Standalone compliance Each element of a financial promotion, be it a social media post, email, or banner ad, must comply with FCA rules. Promotions for intricate financial products might require additional information or disclaimers to ensure consumer understanding. Firms can use hyperlinks or separate pages for this purpose, but the initial promotion itself must still be clear and informative. For promotions displayed across multiple frames (like Instagram stories), the FCA will assess the overall message and ensure a balanced presentation of both benefits and risks. The level of detail required in a promotion will depend on the target audience's needs, the type of decision involved, and any potential for confusion. Prominence There are existing FCA regulations on what information needs to be displayed prominently in financial promotions, and these apply equally to social media as any other channel. Make sure you understand the relevant rules for your products. When promoting on social media, information required to be prominent should be easy to find and understand. This could involve factors like size, position, font style, or even using visuals like graphs or audio-visuals. Don't overwhelm consumers with excessive information. This can be especially problematic on social media, where attention spans are shorter. Consider user testing to see if your promotion is clear and easy to understand. Burying risk information in captions or relying solely on visuals isn't enough. Risks should be presented prominently, following the FCA's Handbook rules. FCA discourages hiding important information behind click-throughs or other user actions. If truncation (like "...see more") cuts off key details, you'll need to find a way to display as much as possible. If displaying all information prominently is impossible, consider including it in an accompanying image (but only if the platform allows displaying images alongside text). The FCA reminds firms of their duty to ensure consumer understanding. If a promotion relies on obscured or truncated information on social media, it might not be compliant with FCA regulations. Suitability of social media for financial promotions Financial promotions must be fair, clear, and not misleading. This means highlighting both potential benefits and relevant risks to inform consumers. Not all financial products are suited for social media promotion. Complex products with intricate features or high risks might be difficult for consumers to understand in a limited format. Consider the platform's limitations. Social media with character restrictions might not be ideal for explaining intricate financial products. Social media can be a good tool to direct potential customers towards other channels with more detailed information. Consider using "image advertising" to promote your firm generally, without referencing specific products. The FCA advises debt counseling firms to carefully evaluate if social media is an appropriate platform for promoting their services due to the complexity of debt solutions. Promotions for debt solutions should be balanced and highlight both the potential benefits and drawbacks, including risks and costs. Promotions for Buy-Now-Pay-Later (BNPL) products must clearly communicate the associated risks, such as the unregulated nature of the agreements, potential debt burden, consequences of missed payments, and fees. Even seemingly lighthearted content like memes can be considered financial promotions and fall under FCA regulations, especially in the cryptoasset sector. High‑risk investments (HRIs) Firms promoting investment products must be familiar with the specific marketing restrictions outlined in the FCA's Conduct of Business Sourcebook (COBS) for the products they advertise. Certain HRIs, like non-mainstream pooled investments and speculative illiquid securities, are banned from mass promotion to retail investors on social media. While some HRIs like crowdfunding, cryptoassets, and CFDs can be marketed to retail investors, they are subject to specific restrictions. Firms need to ensure their promotions comply with these rules, including prominent risk warnings and bans on investment incentives. Prescribed risk warnings Risk warnings for HRIs and high-cost short-term credit (HCSTC) must be displayed prominently and at the same time as the promotion itself, not buried later or hidden in less noticeable areas. Research shows consumers are more likely to understand risk warnings if they are concise and clear. Avoid burying them amongst other promotional elements. When a full risk warning is required, firms cannot hide it behind a click-through or another user action. This applies particularly to platforms that truncate text, where the full warning must be visible without needing to click "see more...". If FCA rules allow a shortened warning, ensure the entire shortened phrase is displayed clearly and the full warning is easily accessible through a click-through. Don't drown out risk warnings with flashy visuals or highlight only the benefits of a product. The promotion needs to be fair and clear, presenting both sides of the coin. The FCA offers examples of prominent risk warnings on various social media platforms. Consulting these case studies can help firms ensure compliance. Fortunately, the FCA Guidance includes various of useful tables and illustrative examples of compliant and non-compliant promotions, offering firms a clear side-by-side comparison to ensure their social media marketing hits the right note. For instance, see the Table 1 below for illustrative examples of prominent risk warnings across various social media channels: Compliance with the regime for unregulated non‑UK based entities The FCA guidance clarifies the rules for overseas entities promoting financial products on social media that might reach UK consumers: Even if a financial promotion originates outside the UK, it can be subject to FCA regulations if it's accessible to UK consumers. Unauthorized overseas firms have several options to comply with FCA rules: Getting their promotions approved by a UK authorized person. Geo-blocking UK users from accessing their promotions. Modifying their content to avoid inviting UK consumers to invest. Implementing controls to prevent UK consumers from engaging with the promotion. Simply stating a promotion is "not for UK consumers" is unlikely to be sufficient for compliance. When authorized and unauthorized entities within a group share social media channels, extra caution is needed. The FCA has seen cases where UK consumers interacted with what they believed to be a UK-regulated firm, but were actually connected to an unregulated overseas entity. Groups with both authorized and unauthorized entities using shared social media channels need to: Ensure unauthorized entities' promotions comply with FCA rules. Have safeguards in place to prevent UK consumers from being directed to unregulated overseas websites. Consider having the UK authorized entity approve all social media promotions. As an alternative, firms can create separate social media accounts specifically for UK consumers. These accounts must be actively managed and not simply empty shells. Unregulated Activity: If unauthorized overseas entities provide financial services to UK consumers, they may be in breach of separate FCA regulations prohibiting unauthorized regulated activity. The Consumer Duty The Duty applies to all social media communications and financial promotions, even if there's no direct customer relationship. Meeting basic standards for fair and clear communication is no longer enough. Firms must actively support informed decision-making by consumers. Marketing strategies should consider the target audience and the specific social media platform being used. Testing for clarity and understanding among the target market is encouraged. Confining promotions to a limited target market on social media can be challenging. Simply disclaiming "for professionals only" might not be sufficient. Firms need to ensure they can effectively control who sees the promotion to avoid unintended exposure to unsuitable consumers. The FCA warns against bombarding consumers with repeated promotions, especially those exploiting behavioral biases of vulnerable audiences. Regularly reviewing and adapting social media marketing strategies is crucial, especially as platforms evolve and new features emerge. The FCA offers its own research (OP23, OP26) on consumer behavior to help firms understand how to best promote financial products. Firms should also consider the FCA's sector-specific reviews, such as marketing expectations for high-cost lenders, when formulating their social media marketing strategies. Recipients sharing or forwarding communications, Unsolicited promotions, and Approval and record‑keeping Firms remain responsible for breaches in their original communication, even if others share or forward it on social media. Sharing promotions with a limited target market can be difficult on social media. Firms should consider if it's the right platform for such products. If a firm shares a customer's social media post promoting a financial product, the firm is responsible for compliance, even if they didn't create the original content. The FCA reminds firms of existing rules regarding unsolicited promotions (cold calling) and electronic marketing communications (PECR). Following a customer's social media profile does not constitute an established client relationship for exemption from these rules. Understanding the distinction between real-time and non-real-time promotions is crucial, as different FCA rules apply. Social media promotions (e.g., tweets) are generally considered non-real-time. Firms must have a system for approving social media communications by qualified senior personnel, as required by the Senior Management Arrangements sourcebook (SYSC). Adequate records of these communications must also be maintained (SYSC 9) to protect consumers and address potential complaints. Social media platforms themselves should not be relied upon for record-keeping due to potential content deletion. Influencers and Financial Promotions Even if a financial promotion is approved by an authorized person, the FCA can still take action if influencers promote it in a non-compliant way. The FCA recognizes various influencer models: Celebrity influencers with large followings, but no financial expertise, may be promoting financial products without necessarily understanding the intricacies. "Finfluencers," who may not be FCA-authorized to provide financial advice but offer recommendations on social media, require special attention due to the high level of trust consumers place in them. Online forums and discussion groups can also be used to promote financial products or services, and the FCA is aware of their potential for misuse. The FCA emphasizes that any influencer can be held responsible for communicating illegal financial promotions regardless of their follower count. The FCA has partnered with the Advertising Standards Authority (ASA) to create an infographic specifically to help influencers understand their obligations when promoting financial products or services. This resource encourages influencers to carefully consider if they are a suitable fit for the product and educates them about the potential legal risks of promoting financial products illegally. Social Media Platforms and Financial Promotions Firms and influencers must comply with both FCA regulations and the specific advertising policies of each social media platform they use. Social media platforms have a role to play in preventing illegal financial promotions. This includes removing such content when identified and considering the suitability of their platform for promoting complex financial products. The Online Safety Act places additional duties on social media platforms to proactively mitigate the risks of illegal content, including illegal financial promotions. The FCA is working with Ofcom (the Office of Communications), the regulator overseeing the Act, to ensure a smooth alignment between the Online Safety Act and financial promotion legislation. *** The Financial Conduct Authority's recent Guidance ensures that every entity involved in online financial promotions, including influencers and social media platforms, adheres to stringent rules to protect consumers. As digital interactions deepen, staying compliant is crucial for your business. At Prokopiev Law Group, we leverage a broad global network of partners to ensure your compliance worldwide, keeping you ahead in the rapidly evolving financial promotion landscape. If you require detailed information or guidance on navigating these regulations, write to us today. Prokopiev Law Group delivers dynamic legal solutions tailored to the digital and blockchain sectors. Our services span from DAO legal support and Web3 terms of service to crypto token sale legal advice and NDA for blockchain teams. We excel in protecting intellectual property in the Web3 space, ensuring crypto source code protection, and managing trademark registration in blockchain. Our legal team is adept in formulating litigation strategies for crypto startups, devising robust tax strategies for blockchain projects, and enforcing compliance with token sale regulations. We also offer advanced advisory in insider trading policies for crypto businesses, Web3 legal risks management, and blockchain data protection laws. Whether it's decentralized finance consulting, NFT rights protection, smart contract analysis, or comprehensive blockchain compliance audits, Prokopiev Law Group is your premier partner for navigating the intricate legalities of the digital world. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Introduction The Abu Dhabi Global Market (ADGM), a finance-focused free zone within the Emirate of Abu Dhabi, administers a distinct and comprehensive regulatory framework for crypto-asset activities. Established by the Financial Services Regulatory Authority (FSRA), this framework governs the operations of entities engaging in crypto-asset spot transactions from within ADGM since June 2018. Regulatory Framework Overview Entities wishing to undertake regulated crypto-asset services must comply with regulatory requirements, including Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) rules, Know Your Customer (KYC) regulations, market surveillance protocols, and specific licensing mandates. Central to this regulatory approach is acquiring a Financial Services Permit (FSP), compulsory for conducting Regulated Activities concerning Virtual Assets in or from ADGM. Application Process for Financial Services Permit The process for obtaining an FSP is structured into five principal stages: Due Diligence and Initial Discussions: Prospective entities engage in preliminary discussions with FSRA teams. This stage involves explaining their business models, demonstrating compliance with established regulations, and providing technological demonstrations. Formal Application Submission: Entities submit a detailed Virtual Asset Application Form, requisite supporting documentation, a comprehensive launch plan, and the associated fees. FSRA commences a formal review after receiving these submissions. In Principle Approval (IPA): This approval is granted after reviewing the application and supporting documents, contingent on the applicant's adherence to all regulations. Certain conditions must be fulfilled before receiving final approval. Final Approval: Final approval is granted conditional upon satisfactory completion of operational testing and capabilities, as well as third-party system verifications if necessary. Operational Launch Testing: This is particularly crucial for Multilateral Trading Facilities (MTFs) and Virtual Asset Custodians; this phase involves operational testing to ensure compliance with FSRA's standards, potentially including third-party system verifications. Corporate Establishment and Location Requirements To be eligible for an FSP, an entity must establish a corporate presence within ADGM. The regulatory requirements stipulate that an Authorized Person, Recognized Body, or Applicant must have their head office and registered office within ADGM to conduct any Regulated Activities or Activities under a Recognition Order. Applicants can be either a Body Corporate or a Partnership, depending on the nature of the Regulated Activities envisaged. Specific Eligibility for Regulated Activities Different types of Regulated Activities under the Virtual Asset Framework demand specific organizational forms: Entities aiming to effect or carry out Contracts of Insurance must be incorporated as a Body Corporate. Those engaging in Accepting Deposits may be either a Body Corporate or a Partnership. Entities acting as the Trustee of an Investment Trust must be a Body Corporate. Virtual Assets Definition and Regulatory Treatment In line with the Financial Action Task Force's guidelines, FSRA defines a "Virtual Asset" within the Financial Services and Markets Regulations (FSMR) as a digital representation of value that can be traded digitally, which functions as a medium of exchange, a unit of account, or a store of value. However, it does not have legal tender status in any jurisdiction. Furthermore, Virtual Assets are neither issued nor guaranteed by any jurisdiction and are recognized solely by agreement within the respective user community, distinguishing them from Fiat Currency and E-money. Digital Securities are recognized under paragraph 58(2)(b) of FSMR as securities encompassing digital/virtual tokens exhibiting characteristics akin to shares, debentures, and units in a collective investment fund. Entities engaging in services related to Digital Securities, such as managing investments or providing advice, require a Financial Services Permission (FSP) and are subject to market intermediaries and market operators' regulations within ADGM. Conversely, Virtual Assets are classified as commodities, and although they are not deemed Specified Investments under the FSMR, market intermediaries handling these assets, such as brokers and custodians, must obtain FSRA approval and an FSP. Regulatory Approach The FSRA's regulatory approach delineates the treatment of different categories of digital assets: Derivatives and Collective Investment Funds of Virtual Assets and Digital Securities are regulated as Specified Investments under the FSMR. Utility Tokens, which are for access to a specific product or service using a DLT platform but do not exhibit the features of a regulated investment, are treated as commodities. Fiat Tokens are digital representations of Fiat Currency. If used as a payment instrument, they are regulated under the FSMR and considered Providing Money Services. Risks and Mitigations The FSRA outlines risk areas and mitigation strategies within the Virtual Asset Framework: AML/CFT/Tax: Compliance with the AML Rulebook is mandatory for all Authorized Persons, alongside reporting obligations under FATCA and Common Reporting Standards. Consumer Protection: The risks associated with Virtual Assets must be transparently disclosed to consumers, and they must be monitored and updated regularly. Technology Governance: Authorized Persons must ensure robust governance over virtual asset wallets, private keys, origin and destination of funds, security, and risk management systems. 'Exchange-Type' Activities: MTFs using Virtual Assets are mandated to establish market surveillance, fair and orderly trading, settlement processes, transaction recording, a rulebook(s), transparency, and public disclosure mechanisms. Custody: Providers holding or controlling Virtual Assets or client money (e.g., fiat currencies) must comply with Safe Custody and COBS (Client Order Book Systems) under the FSMR. Activities involving Virtual Assets that are subject to regulation include: Operating a Multilateral Trading Facility (MTF) Acting as a Virtual Asset Custodian Dealing in or Arranging transactions in Virtual Assets Managing and Advising on investments in Virtual Assets Entities performing these functions must adhere to the corresponding regulations and obtain the necessary FSRA approvals. Capital and Fee Structure In adherence to the Abu Dhabi Global Market (ADGM) regulations, entities engaging in Virtual Asset activities are subject to specific capital and fee requirements reflecting the substantial supervisory resources needed for these operations. Capital Requirements Pursuant to COBS Rule 17.3 and MIR Rule 3.2.1, an Authorised Person dealing with Virtual Assets must maintain regulatory capital in fiat currency. This must equate to at least 12 months' operational expenses for an entity operating a Multilateral Trading Facility (MTF) for Virtual Assets. Other Authorised Persons conducting regulated activities related to Virtual Assets must hold capital equivalent to 6 months' operational expenses. Suppose an Authorised Person engages in other regulated activities unrelated to Virtual Assets. In that case, the FSRA enforces the higher capital requirements from those mandated by the Prudential – Investment, Insurance Intermediation, and Banking Rules (PRU). Fee Requirements Fees are imposed on entities within the ADGM performing Virtual Asset services, including authorization and annual supervision fees. The structure is as follows: General Virtual Asset service providers must pay an initial authorization fee of USD 20,000 and an annual supervision fee of USD 15,000. Entities operating an MTF for Virtual Assets are subject to an authorization fee of USD 125,000 and an annual supervision fee of USD 60,000. A sliding-scale trading levy applies to MTFs handling Virtual Assets, determined by the transactions' Average Daily Value (ADV). The fees for entities conducting multiple regulated activities are cumulative and adjust according to the specific combination of services provided. Mandatory Appointments The General Rulebook (GEN) mandates that every Authorised Person appoint approved individuals to essential roles, including a Senior Executive Officer, Finance Officer, Compliance Officer, and Money Laundering Reporting Officer, all of whom must reside in the U.A.E. Additionally, any Directors of a Body Corporate with headquarters and registered offices within ADGM must be registered as Licensed Directors. Accounting and Auditing Requirements The GEN Rulebook requires that: Financial statements are prepared annually for each Authorized Person and Recognized Body. The Regulator must be notified of Auditor appointments, terminations, or resignations in the prescribed form. Appropriate steps must be taken to ensure the selected Auditor possesses the necessary qualifications to audit the entity's business. Multilateral Trading Facilities (MTFs) Defined under the FSMR and related guidance, an MTF is a system that consolidates buying and selling interests for investments in a non-discretionary manner, resulting in a contractual agreement. Entities operating an MTF or an Organised Trading Facility must adhere to stringent regulations, including the maintenance of non-discretionary rules and engagement in activities that result in legally binding contracts for financial instruments, Virtual Assets, or spot commodities. PRU Categorization The PRU Rulebook categorizes Authorized Persons to determine applicable provisions. Authorized Persons are permitted to conduct regulated activities of a lower category if authorized under their Financial Services Permission. Categories of Authorised Persons In the regulatory framework established by the Financial Services Regulatory Authority (FSRA) within the Abu Dhabi Global Market (ADGM), Authorised Persons are classified into distinct categories based on the regulated activities they are authorized to conduct. The classification is as follows: Category 1: Activities include Accepting Deposits and Managing a Profit-Sharing Investment Account, which is PLS (Profit and Loss Sharing). Category 2: Providing Credit and Dealing in Investments as Principal. Category 3: Split into three subcategories (3A, 3B, and 3C), this includes various activities such as Dealing in Investments as an Agent, Managing Assets, Providing Custody, and Operating a Multilateral Trading Facility. Category 4: Encompasses Arranging Credit, Advising on Investments or Credit, Insurance Intermediation, and other specific activities not included in the higher categories. Category 5: This category is reserved for those conducting non-mainstream regulated activities, such as Operating a Private Financing Platform. Capital Requirements The FSRA mandates base capital requirements for Authorised Persons operating within the ADGM, applicable across all categories as a fundamental component of their financial adequacy. Base capital requirements vary according to the category of Authorised Persons as follows: Category 1: USD 10 million Category 2: USD 2 million Category 3A: USD 500,000, unless the Authorised Person is dealing in investments as a principal involving OTC Leveraged Products with Retail Clients, in which case the base capital requirement is USD 2 million. Category 3B: USD 4 million Category 3C: USD 250,000, which may increase to USD 150,000 or USD 500,000 based on the type of fund managed or the provision of Financing Platforms and holding Client Assets. Maintenance and Notification of Capital Resources Authorized Persons in Category 3B, 3C, or 4 must always maintain capital resources that meet or exceed the capital requirement. If capital resources fall below 120% of the Capital Requirements, the regulator must be notified proactively. Capital Calculation for Categories 3B, 3C, and 4 The capital requirement for these categories is calculated as the higher of the base capital requirement or the Expenditure Based Capital Minimum. The latter is informed by the actual expenses and provides a real-time reflection of the capital adequacy relative to the entity's operational volume. Regulated Activity of Providing Money Services For entities engaged in the regulated activity of Providing Money Services, capital requirements are to be calculated as the greatest of: The base capital requirement, The Expenditure Based Capital Minimum, or A Variable Capital Requirement applicable to specific activities within the Money Services domain. Variable Capital Requirement Calculation for Money Remitters Money Remitters must calculate their Variable Capital Requirement based on a percentage of their monthly payment volume, with the following tiered structure: 1.25% of the first USD 10 million 0.5% of the next USD 90 million 0.25% of the subsequent USD 150 million 0.125% of any further payment volume The monthly payment volume is determined by the annual funds remitted, averaged per month, or by a combination of actual and projected figures for newer entities. Variable Capital Requirement for Payment Account Providers Payment Account Providers calculate their Variable Capital Requirement using a similar tiered percentage structure of their monthly payment volume, with rates of: 2.5% of the first USD 10 million 1% of the next USD 90 million 0.5% of the subsequent USD 150 million 0.25% of any additional volume Guidance for Variable Capital Calculation The FSRA provides guidance on calculating the Variable Capital Requirement, emphasizing a tranche-based approach. Payment volumes are segmented, and different percentage factors are applied to each tranche to determine the cumulative Variable Capital Requirement. Substantive Operational Presence in ADGM The FSRA stipulates that an Authorised Person conducting regulated activities in relation to Virtual Assets must have a substantive operational presence within the Abu Dhabi Global Market (ADGM). Central to this requirement is the establishment of the 'mind and management' of the Authorised Person within ADGM to ensure effective control and oversight. Specific Requirements for Multilateral Trading Facilities For Multilateral Trading Facilities (MTFs) engaging with Virtual Assets, the FSRA mandates a physical presence within ADGM. This contains involvement in the MTF's operations, including but not limited to: Control over the order book Management of the matching engine Adherence to established rulebook(s) Ensuring the facilitation of fair and orderly markets Implementing settlement procedures Monitoring and prevention of market abuse in line with the Market Infrastructure Rules (MIR) and the Conduct of Business Sourcebook (COBS) Chapter 8 For start-up MTFs, complete regulatory oversight by the FSRA is required over their entire order book and matching engine functionalities. Existing virtual asset exchanges with components of their order book or matching engine located outside of ADGM must delineate the aspects that will fall under FSRA's jurisdiction as part of their application to become authorized MTFs within ADGM. Exclusive Operation of Markets within ADGM The FSRA asserts that within ADGM's jurisdiction, only authorized MTFs may conduct market operations that involve the matching of orders or aid in price discovery for Accepted Virtual Assets. The scope and degree of FSRA's regulatory oversight are designed to be comprehensive and may differ significantly from other global regulatory bodies. Trading Pairs on MTFs In the trading environment of MTFs, the FSRA permits trading pairs that consist exclusively of: Exchanges between Fiat Currency (or its equivalent value) and Accepted Virtual Assets Exchanges between Accepted Virtual Assets and Fiat Currency (or its equivalent value) Trades involving one Accepted Virtual Asset for another Links Guidance – Regulation of Virtual Asset Activities in ADGM Other necessary documents to analyze: Conduct of Business Rulebook (COBS) Fees Rules (FEES) General Rulebook (GEN) FINANCIAL SERVICES AND MARKETS REGULATIONS 2015 Code of Market Conduct (CMC) Market Infrastructure Rulebook (MIR) The description of the application process Presentation of ADGM about Regulated activities, fees and key requirements (including virtual assets), namely about virtual assets *** Prokopiev Law Group is adept at navigating the complex requirements for crypto licensing, ensuring comprehensive compliance for your operations globally. Our network of partners amplifies our capability to facilitate your adherence to international standards. For entities seeking to engage in crypto-asset activities within the Abu Dhabi Global Market (ADGM) and require authoritative guidance on acquiring a Financial Services Permit (FSP), Prokopiev Law Group stands ready to assist. Our global partnership encompasses all facets of regulatory compliance, from capital requirements to the establishment of a substantive operational presence and effective governance structures. Whether your focus is on Multilateral Trading Facilities (MTFs), Virtual Asset Custodianship, or other regulated activities within the dynamic sphere of Virtual Assets, we ensure that your business is fortified against regulatory uncertainties. Connect with Prokopiev Law Group for tailored solutions that align with the Financial Services Regulatory Authority (FSRA) mandates. Let us be the cornerstone of your successful compliance journey in the burgeoning realm of crypto licensing, both within the ADGM and on a global scale. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Token listings on centralized exchanges represent a significant milestone for blockchain projects, offering them enhanced visibility, liquidity, and credibility within the digital asset ecosystem. This process, however, is more than merely a business decision but a complex legal endeavor that necessitates thorough compliance with existing regulations and legal frameworks. While major exchanges often do not publicly disclose specific criteria for listing or delisting tokens, insights can be gleaned from their public communications and our legal experience within the crypto space. General Criteria for Token Listings on Centralized Exchanges The basic criteria used by major exchanges are the following: Project Commitment and Development Activity: A strong commitment from the project team, evidenced by ongoing development efforts, regular updates, and clear communication with the community. This includes maintaining an active GitHub repository, publishing development roadmaps, and engaging with users on social media platforms. Utility and Offering: The token must present a clear use case or solve a particular problem within the crypto or traditional ecosystems. Long-term viability is often tied to the token's ability to address real-world issues and provide tangible benefits to its users. Community Engagement and User Network: An engaged community indicates a project's health and potential for success. Active involvement in community-building activities, such as airdrops, IDOs, and regular interactive sessions, is crucial. Liquidity and Market Presence: High liquidity levels ensure that tokens can be easily traded, a key factor for exchanges. Security Measures:  Security protocols to protect against hacks and ensure the safety of network operations. This includes regular audits of smart contracts, network monitoring, and implementing best practices in cybersecurity. Regulatory Compliance and Ethical Conduct: Adherence to regulatory requirements, including AML/KYC norms, and a clear stance against unethical practices. Exchanges conduct due diligence to avoid association with projects involved in fraudulent or negligent activities. Integration and Compatibility: Compatibility with the exchange's native ecosystem and standards can significantly increase the chances of listing. Projects are encouraged to integrate exchange-specific tokens to enhance their appeal. Proactive Post-Application Engagement: Continuation of project development and community engagement after the application for listing has been submitted. When applying for token listings on centralized exchanges, projects must also prepare beyond basic listing criteria, focusing on showcasing their project's strengths and compliance with exchange standards. This involves preparing a clear project pitch and providing legal documentation to confirm the token's compliance with regulations. Projects should clearly define the problem they aim to solve, their target market, user base, and a detailed project history and future roadmap. It is important to be ready to describe the token's utility, why it's necessary for the project, and how the project stands out from competitors. Sharing project metrics, community engagement efforts, and development progress is also essential. Projects must demonstrate their commitment to security through audits, detail the team's expertise, and provide financial details, including market capitalization, token supply, and funding usage. General Delisting Practices Centralized exchanges maintain the integrity and quality of their trading environment by ensuring that all listed tokens and trading pairs continuously meet high performance, security, and compliance standards. Below are general practices and considerations surrounding delisting process. Periodic Review and Continuous Compliance: The primary factor for maintaining a token's listing status is its continuous adherence to the exchange's listing criteria post-approval. Exchanges conduct regular evaluations to ascertain whether listed tokens still comply with the required standards, including development progress, team commitment, and market performance. Handling of Negative Developments: Exchanges closely monitor any negative changes or incidents affecting listed projects, such as deviations from the project's original plans, security breaches, or significant team changes. The project team's response to such incidents, including measures taken to prevent future occurrences, is critically assessed. User Feedback and Complaints: A large volume of complaints or negative feedback regarding a particular token can trigger an in-depth investigation to re-evaluate the token's compliance with the exchange's standards. Market Performance: Poor liquidity and trading volume are significant factors that may lead to the delisting of spot/margin trading pairs. While delisting trading pairs does not directly affect the token's listing status, it reflects on the token's market performance and could influence further review outcomes. Regulatory Compliance: Changes in regulatory requirements or failure to comply with applicable laws can prompt exchanges to delist tokens to protect users and adhere to legal standards. Legal Considerations for Token Listing Among the general criteria for a token listing on a centralized exchange, legal considerations stand out as critical elements that must be taken into account. Jurisdiction and Entity Type: Centralized exchanges favor projects registered in jurisdictions with Virtual Asset Service Provider (VASP) legislation, holding the necessary legal registration, authorization, or license. For projects without a specific license, registration in countries lacking crypto-specific laws may be beneficial. In such cases, demonstrating adherence to general Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) compliance frameworks could suffice for listing purposes. Ownership Structure: Projects should be prepared to disclose their ownership structure fully. This includes detailing the founders, major stakeholders, and beneficial owners. Exchanges scrutinize this information to assess the project's transparency and legal integrity, ensuring there are no hidden risks or associations with illicit activities. Token Legal Status and Utility: A project must establish a well-defined legal status for its token, necessitating the support of legal opinions to verify compliance with applicable laws. The significance of the token's role, its utility within the project, and its essential nature contribute fundamentally to its legal standing. These legal assessments should detail the token's designation as either a security, utility, governance, hybrid, or other type within the regulatory environments of key exchanges and intended markets. Tokenomics and Regulatory Framework. The token sale strategy must be regulated appropriately, including ICOs, IEOs, or other distribution models. Projects must articulate their tokenomics clearly, demonstrating how tokens are distributed, used, and valued within the ecosystem. This includes outlining any regulatory frameworks applied to the token sale and ongoing operations. Regulatory Compliance: Projects must ensure compliance with global regulatory standards, focusing on securities regulations, AML/CFT rules and regulations, data protection, and privacy laws. A reputable compliance officer plays a vital role in maintaining these standards, and both the CEO and compliance officer should be prepared to undergo KYC processes with the exchange. Clear Marketing Practices. Marketing materials, including the whitepaper and website content, must comply with regulatory requirements and avoid promoting the token as an investment. Projects should steer clear of shilling, ensure community integrity, and avoid making unrealistic promises to potential token holders. Policies. Having well-drafted internal policies is essential. This includes at least AML/CFT and KYC procedures, terms of use, and privacy policies. Continuity and Resilience. Projects must establish a corporate, management, and operational model that ensures continuity of operations, regardless of adverse events. Exchanges favor resilient projects with plans for long-term viability and the ability to withstand market volatility and other challenges. In conclusion, the pathway to token listing on a centralized exchange is paved with a series of legal considerations that projects must meticulously steer. By addressing the above legal considerations with diligence and precision, projects can significantly enhance their prospects for listing. *** Prokopiev Law Group positions itself as an ally for blockchain projects aiming for successful exchange listings. Our law firm specializes in guiding projects through the application process, conducting due diligence, and leveraging global partnerships to secure token legal opinions essential for meeting exchange and regulatory standards. With a team well-versed in the nuances of blockchain law, Prokopiev Law Group offers a suite of services tailored to the unique needs of each project. These services encompass: Jurisdictional Analysis and Entity Formation: Advising on the optimal jurisdiction for project registration and facilitating the legal establishment of entities, ensuring alignment with Virtual Asset Service Provider (VASP) legislation and other regulatory frameworks. Ownership Structure Clarification: Assisting projects in structuring and disclosing their ownership in a manner that meets transparency requirements and exchange scrutiny. Token Legal Status Consultation: Providing legal opinions on the token's classification, addressing securities laws, and ensuring compliance in target markets. Regulatory Strategy: Developing compliance strategies that cover AML/CFT obligations, data protection, privacy laws, and more, underscored by the appointment of reputable compliance officers. Marketing and Communication Compliance: Reviewing marketing materials, whitepapers, and website content to ensure they are free from investment solicitations and compliant with legal standards in project jurisdictions. Tokenomics and Sale Regulation: Advising on token sale strategies, distribution models, and the regulatory implications of ICOs, IEOs, and other fundraising mechanisms. Policy Development: Drafting detailed internal policies, including AML/CFT, KYC procedures, terms of use, and privacy policies, to fortify projects against regulatory risks. Operational Resilience Planning: Consulting on corporate, management, and operational frameworks that ensure project continuity and resilience against adverse events. By partnering with Prokopiev Law Group, blockchain projects can confidently address the legal aspects of token listings, from initial planning to post-listing compliance. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Blockchain technology has introduced a revolutionary asset management and investment approach, notably through tokenizing real-world assets (RWAs). Tokenized RWAs on the blockchain represent a diverse array of physical and traditional financial assets, including but not limited to cash, commodities, equities, and bonds. This process transforms how these assets are accessed, exchanged, and managed, leveraging blockchain technology to offer opportunities in financial services and various non-financial applications. Key Terms Tokenization: This refers to converting rights to an asset into a digital token on a blockchain. This involves fragmenting the asset into tradable shares or tokens, each representing a fractional ownership or interest in the asset. Real-World Assets (RWAs): These are tangible or intangible assets outside the digital realm, such as real estate, art, or commodities. Smart Contracts: Automated, self-executing contracts with the terms directly written into code on a blockchain, facilitating, verifying, or enforcing the negotiation or performance of a contract. Tokenizing an asset involves a multi-step process: Asset Identification and Valuation: The first steps involve identifying the asset to be tokenized, which could range from real estate and fine art to commodities or intellectual property. An asset valuation is then conducted, followed by a decision on fractionally representing the asset in digital tokens. Legal and Regulatory Compliance: Ensuring adherence to relevant laws and regulations may involve forming legal entities like Special Purpose Vehicles (SPVs) to streamline tokenization while complying with legal norms. An SPV is established for specific financial objectives, including asset management, risk mitigation, or investment facilitation. Smart Contract Creation: The next step is the creation of blockchain-based smart contracts. These contracts detail the procedures for token creation, management, and trading. Smart contracts are instrumental in automating processes and ensuring execution per agreed terms. Blockchain Platform Selection: Platforms like Ethereum are often preferred for their smart contract capabilities and robust developer community, but other blockchain systems with tokenization features can also be considered. Token Creation: This stage involves the generation of digital tokens that signify ownership or rights over the physical asset. Each token typically represents a fraction of the asset's value; it can be fungible or non-fungible. These tokens are developed on the selected blockchain, adhering to established standards such as ERC-20 or ERC721 for Ethereum-based tokens. Ownership Ledger: Blockchain technology provides a transparent and immutable ledger to record token ownership. This ledger tracks all transactions involving the tokens, including purchases, sales, and transfers. Custody Solutions: Robust custody solutions are essential for the physical assets underlying the tokens. This may involve physical security for tangible assets or secure digital storage solutions for intangible assets. Off-chain Data Integration: Ensuring the integrity and transparency of the tokenized assets necessitates incorporating reliable off-chain data. This is typically achieved through decentralized oracle networks, which securely feed external, real-world information to the blockchain, thereby maintaining the accuracy and transparency of the tokenized assets. Exchange and Marketplace Integration: A vital component is establishing a marketplace or platform for buying, selling, and trading these tokenized assets. Integration with cryptocurrency exchanges is often employed to facilitate easy access and trading for investors. Enhancing Accessibility and Liquidity: Tokenizing physical assets boosts their accessibility and liquidity. Unlike traditional markets with stringent trading hours and high entry barriers, these tokenized assets can be traded continuously, offering greater flexibility and accessibility to investors. Legal Challenges in RWAs Tokenization Despite the technological advancements, tokenizing RWAs presents several legal challenges: Regulatory Compliance: Adhering to diverse regulatory frameworks, especially when dealing with security tokens subject to securities laws. Tokenized assets might be subject to the laws of multiple jurisdictions, mainly if traded internationally. Custody and Ownership: Ensuring secure custody of the physical assets and clear legal ownership represented by the tokens. The transfer of tokens must adhere to property transfer laws. Smart Contract Integrity: Mitigating risks associated with potential bugs or vulnerabilities in smart contract code. Market Liquidity and Demand: Ensuring sufficient market demand and liquidity for the tokenized asset to thrive. Asset Valuation and Due Diligence: Establishing a clear and accurate valuation of the RWA to be tokenized, which involves due diligence to ensure the asset's legitimacy and worth. Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance: Token issuers must ensure compliance with AML and KYC regulations to prevent illicit activities. Data Privacy and Security: Compliance with data protection laws, like GDPR, is essential, especially since blockchain transactions are transparent and immutable. Taxation: The tax implications of tokenizing and trading RWAs can vary by jurisdiction. Benefits of Tokenizing Real-World Assets Tokenized RWAs offer multiple advantages: Expanded Market Liquidity: Tokenization significantly improves the liquidity of real-world assets, facilitating more accessible and faster trading on a global scale through blockchain networks. This process transforms traditionally less liquid assets into more freely tradable forms. Improved Transparency and Risk Management: The representation of assets on the blockchain ensures a higher degree of transparency. A proper application may allow for more effective auditing and asset tracking, contributing to reduced systemic risks in financial systems. Enhanced Accessibility and Inclusivity: Tokenization democratizes access to various asset classes, enabling a more extensive range of investors to participate. It allows fractional ownership, making it feasible for smaller investors to engage in markets traditionally dominated by larger entities. RWAs Tokenization and DeFi DeFi protocols are increasingly integrating traditional credit markets, such as equity and debt financing, into their frameworks, tapping into a market that drives trillions of dollars and forms the backbone of the global economy. DeFi opens a gateway to a range of opportunities by converting various assets into digital tokens on a blockchain. This includes the utilization of RWAs as unique collateral or investment avenues, the creation of market efficiencies, and access to a level of liquidity that remains elusive in conventional financial markets. Tokenization enables businesses to leverage the DeFi ecosystem for capital acquisition, offering a lower barrier to entry and novel financing mechanisms, which are particularly beneficial for emerging markets. The DeFi ecosystem itself reaps significant advantages. These include new avenues for investment yield, access to diverse off-chain markets, and an expanded customer base that extends into traditional finance. Examples of RWAs Tokenization Financial Assets Within the financial domain, tokenizing assets such as bonds, stocks, and shares heralds a new era of asset fractionalization. This process democratically opens investment opportunities to a global investor base, enhancing the liquidity and tradability of financial instruments. Tokenized financial assets enjoy the advantages of decentralized trading platforms — efficiency, reduced costs, and improved security. Investment Funds The burgeoning interest in tokenization from private equity and treasury funds is reshaping the investment landscape. Tokenization offers a comprehensive lifecycle for fractionalized investments, from inception to maturity. For fund managers, this equates to augmented distribution control and operational efficiency, while investors gain from lower entry barriers and improved liquidity. The legal considerations here are multifaceted, involving structuring to conform to collective investment schemes regulations and guaranteeing transparent and compliant distribution channels. Payment Settlement Tokenization also revolutionizes the payment settlement process. Delivery-versus-payment (DvP) models in token-based transactions can now bypass traditional clearing and settlement facilities, leveraging smart contracts for real-time settlement. This shift promises reduced costs and enhanced efficiency. Still, it must navigate the complex legalities of payment systems regulation, ensuring smart contracts fulfill the roles of traditional intermediaries within the legal framework. Real Estate In the real estate sector, tokenization is simplifying a historically intricate process. Real estate tokenization brings about a drastic reduction in transaction costs and intermediary elimination and opens the market to a broader investment audience. The legal terrain here is particularly challenging, requiring a legal basis for token structures, compliance with property law, and a framework for ownership and transfer rights in the digital space. Central Bank Digital Currencies (CBDCs) A significant development in asset tokenization is the advent of Central Bank Digital Currencies (CBDCs). Unlike digital fiat visible in electronic bank accounts, CBDCs are unique in being issued on blockchain networks. This enables the traceability of each token throughout its lifecycle and allows for real-time tracking of CBDC holdings. Several nations, including major economies, are actively exploring CBDC implementation. While CBDCs hold promise for enhancing transparency and combating fraud, they also raise significant concerns regarding privacy and potential increases in governmental monitoring capabilities. Fundraising Through Security Token Offerings (STOs) In fundraising, blockchain tokens have improved the ability of projects and businesses to secure capital. The emergence of smart contracts on platforms like Ethereum has facilitated direct public fundraising through initial coin offerings (ICO). However, the regulatory stance on ICOs has shifted, with market regulators scrutinizing and frequently categorizing them as unregistered securities, thereby ushering in a period of legal and financial uncertainty for such fundraising methods. Security Token Offerings (STOs) emerge as a solution, aiming to reconcile the nature of ICOs with the stringent regulatory environment of initial public offerings (IPOs). STOs allow entities, ranging from startups to large corporations, to issue digital securities directly to the public without intermediaries. These offerings must adhere to a regulated process, including publishing a detailed prospectus and obtaining approval from market regulators. Precious Metals Traditionally dominated by instruments like ETFs, futures, and options, the precious metals market is experiencing a liquidity transformation through tokenization. Digital tokens representing these metals, akin to those existing for gold, enable enhanced liquidity and facilitate instantaneous trade settlements via smart contracts. Supply Chain In the supply chain sector, tokenization is a game-changer, enhancing the traceability and authenticity of products. Blockchain tokens can verify the responsible and licensed origin, including the second-hand sale status. Art Market By representing unique art pieces through numerous digital tokens, blockchain technology democratizes ownership, enabling a broader investor base to partake in the art market. Intangible Assets Blockchain tokenization offers enhanced protection for intangible assets such as copyrights, trademarks, and patents. By capitalizing on the immutable nature of blockchain, these assets can become tamper-proof and easily verifiable in real time. Converting a copyright or patent into a non-fungible token (NFT) can secure its authenticity and prevent unauthorized use or duplication. Conclusion The tokenization of RWAs represents a significant shift in asset management and investment. While it offers notable benefits like increased liquidity, transparency, and accessibility, it also poses unique legal challenges, including regulatory compliance, asset custody, and market viability. Prokopiev Law Group provides clear-cut legal services for businesses involved in the tokenization of real-world assets (RWAs). Understanding the challenges of regulatory compliance, asset protection, and the need for seamless cross-border transactions, we offer informed guidance within this complex domain. Our firm taps into an extensive network of legal professionals across multiple jurisdictions to assist clients in various aspects of asset tokenization, from the initial stages of asset selection and smart contract development to navigating the final stages of token issuance and exchange integration. We focus on ensuring that our clients' tokenization strategies are not only innovative but also adhere to the current legal frameworks. For enterprises venturing into the realms of DeFi, STOs, or the broader digital asset market, Prokopiev Law Group is equipped to address the legal intricacies with precision and professionalism. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Web3 is characterized by decentralization, blockchain technologies, AI, and a new paradigm of user interaction and data management. It presents exceptional legal challenges and considerations. While certain fundamental legal principles remain consistent with those of the Web2 era, Web3 introduces specific nuances. It necessitates a refined approach in drafting Terms of Service (ToS) that are legally sound and tailored to the distinctive challenges of the emerging digital and legal landscape. Main Elements of Terms of Service Regardless of whether you're dealing with Web2 or Web3, certain core components should be integrated into any ToS: Introduction and Effective Date: In the ToS, it should be mentioned that they are effective as of a particular date and introduce the terms governing the use of services. User Agreement and Acceptance: Users signify acceptance of the ToS (e.g., by clicking "I agree"). It may include acceptance of linked policies such as the Privacy Policy. Description of Services: Comprehensive detailing of services provided, including any limitations or conditions, and description of site/app's service. Conditions for a particular service, such as age requirements and location-based restrictions, can be specified. User Responsibilities and Conduct: Specifies acceptable and prohibited behaviors; includes service use guidelines and a detailed Rules of Conduct section. Privacy Policy: Elaborates on data collection, use, protection measures, and the use of cookies. User Accounts: If accounts are allowed, details that users ensure data accuracy and are responsible for their account information, including passwords. Intellectual Property Rights: Clarity on content ownership, encompassing user-generated content and service-provided content. User-Generated Content (if applicable): Sets the rules regarding user-contributed content on a platform. Payments and Billing: Outlines the pricing, billing structure, and payment method conditions. If applicable, it may include policies on sales finality and conditions under which refunds are not offered. Dispute Resolution and Governing Law: Guidelines for dispute resolution, jurisdiction, and applicable law, including international use and compliance requirements. Limitation of Liability and Disclaimer: This may include statements limiting liability, disclaimers, and an "AS IS" and "AS AVAILABLE" disclaimer. Addresses liability provisions such as errors in content, personal injury, property damage, and lost profits. Includes information on risk allocation and user liability. Indemnification: Indemnify the company against losses caused by users. Modification and Termination of Service: Details the rights to modify, change, suspend, or terminate service, with or without notice. Includes conditions under which user accounts may be suspended or terminated. Termination and Suspension: Explicit account suspension or termination conditions. Shipping Policy (if applicable): Explains shipping processes and policies for physical goods. Warranty/Guarantee Information: Where applicable, details on warranties or guarantees offered. Third-Party Links: Addresses legal considerations regarding third-party links. Contact Information: Provides up-to-date contact information for legal, support, or dispute resolution inquiries. International Use and Compliance: Specifies particular terms following user area laws; includes statements about users' compliance with their local rules. Modification of Site and Terms: Rights to modify, change, add to, terminate, or suspend any site or ToS part at any time. Identification of the Business: Clear identification of the business operating the website/app. Withdrawal Right (if applicable): Details on the existence of a withdrawal right. Safety Information (where applicable): Includes instructions for proper use and safety information. Web3 Specific Considerations for Terms of Service When drafting ToS for Web3 projects, certain additional elements become pertinent: Decentralization and User Control: Addressing how decentralization impacts user control and responsibility, particularly regarding data and transactions. Smart Contracts: Explanation of smart contracts' role and legal status within the platform, including enforceability issues. Tokenization and Cryptocurrency: Terms covering digital assets, tokens, and cryptocurrencies, including any legal implications. Blockchain Interactions: Clarity on how blockchain technology is used, including implications for data integrity and transaction irreversibility. Data protection issues in this regard should also be explained (better in a separate Privacy Policy). User Anonymity and Pseudonymity: Addressing how anonymity or pseudonymity is handled legally, especially concerning liability and responsibility. Interoperability and Third-Party Integrations: Terms covering how the platform interacts with third-party services and other blockchain networks. Security Risks: Specific clauses about security risks inherent in blockchain technologies and user responsibilities in maintaining security. Inform users about potential service interruptions or issues stemming from blockchain-specific challenges. AI-Generated Content: Address the legal implications of AI-generated content on the platform, ensuring clarity on the ownership and use rights. Cryptocurrency Payments: Detailed provisions regarding using cryptocurrencies as a payment method emphasizing the legal force and the irreversibility of transactions. Users must be aware of the unique nature of cryptocurrency transactions compared to traditional payment methods. KYC and AML Compliance: Outline the necessity of complying with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Specify the procedures and requirements for user verification to ensure compliance with these regulations. Restricted Countries: List the countries where services are restricted due to local regulations, especially those prohibiting crypto transactions. Password and Credential Security: Emphasize the importance of maintaining the confidentiality of passwords and other credentials. In decentralized solutions, the ability to restore lost or forgotten passwords is generally limited or nonexistent. Account Suspension in Decentralized Environments: Detail the specific conditions and processes for account suspension in a decentralized setting where traditional oversight mechanisms may not apply. It may include automated decision-making that is regulated in particular jurisdictions. No Central Authority: Acknowledge the absence of a central governing authority in the ecosystem, explaining its implications for users in terms of self-governance and responsibility. Inform users that contacting support or a central authority may be challenging in decentralized systems. Guide how users can seek assistance or report issues. Legislation and Dispute Resolution: Outline legislation and dispute resolution complexities in a decentralized environment. Address how jurisdictional aspects may be determined and resolved, considering the global and decentralized nature of Web3. Compliance with Specific Legislation (e.g., MiCA): Outline terms necessary to comply with applicable legislation, like the Markets in Crypto-Assets (MiCA) regulation, ensuring that the service aligns with current legal standards. Tax Implications: Address potential regulatory uncertainties regarding tax implications for users, especially related to income or gains from Web3 activities. DAO-Specific Terms: Define terms related to DAOs, including governance, user rights, interactions, treasury allocation, and requirements for participation. Community Group Rules: Establish rules for behavior and interaction within community groups on social platforms related to the service, especially without a central moderation. NFT-Specific Terms: Clarify rights, ownership, and intellectual property matters related to Non-Fungible Tokens (NFTs) that may be traded or used within the platform. Third-Party Service Connections: Detail terms regarding connecting and using third-party services, such as digital wallets for Web3 transactions. Specific Web3 Terms: Define terms related to unique Web3 features such as staking, airdrops, reward policies, bridging services, conduct in the metaverse, and any investment-related terms, if applicable. By incorporating these Web3-specific components into the Terms of Service, the document will comprehensively address the unique aspects and legal considerations of the Web3 environment. This approach ensures clarity, compliance, and informed usage for all participants in the platform. Jurisdictional Variances Recognizing that legal stipulations and enforcement can vary significantly across jurisdictions is imperative. This guideline serves as a general framework, and legal practitioners should tailor the ToS to the specific legal requirements of the jurisdiction in which the Web3 platform operates. Collecting User Consent for Terms of Service in Web3 Traditional Methods of Consent Collection In traditional online environments, user consent for ToS is typically obtained through explicit actions such as clicking an "I Agree" button or checking a box next to a statement acknowledging the ToS. This method, known as active consent, ensures that users are aware of and agree to the terms before using the service. Additionally, some platforms use a passive consent mechanism, where continued use of the service implies consent to the ToS. Transition to Web3: Adapting Consent Mechanisms In the Web3 ecosystem, collecting user consent requires adaptation due to its decentralized and often anonymous nature. The methods must respect the principles of decentralization while ensuring legal compliance. Explicit Consent in Decentralized Interfaces: Web3 platforms can implement explicit consent mechanisms similar to traditional methods. Users could click an "I Agree" button within a decentralized application (dApp). However, given the decentralized nature, the process should be designed to record consent in a verifiable manner, possibly using blockchain technology for transparency and immutability. Smart Contract-Based Consent: Leveraging smart contracts for consent allows for a more integrated approach in Web3. When a user engages with a dApp or a blockchain service, they could be required to interact with a smart contract that records their acceptance of the ToS. This interaction is transparent and tamper-proof, ensuring reliable evidence of consent. Cryptographic Signatures for Agreement: Users can provide consent by signing a message or transaction using their cryptographic keys. This method confirms user agreement and ties the consent to their unique blockchain identity, providing a clear audit trail. Decentralized Autonomous Organization (DAO) for Consent Governance: For platforms governed by a DAO, consent to the ToS can be integrated into the governance process. Users, as part of the DAO, can vote on or agree to the ToS, making the consent process a part of the community governance. Continuous Consent Through Blockchain Interactions: Web3 consent can be ongoing. For example, executing certain transactions or participating in specific blockchain activities could be conditioned on adherence to the latest ToS, with each interaction reaffirming consent. Consent in Immutable Blockchain and Personal Data Protection Legislation The Challenge of Immutability Blockchain technology is inherently immutable, meaning it cannot be altered or deleted once data is recorded. While ensuring data integrity and trust, this characteristic poses a significant challenge in personal data protection laws, such as the General Data Protection Regulation (GDPR) in the European Union and similar legislations globally, often requiring data to be amendable and deletable. Legislations like the GDPR grant individuals the right to have their personal data erased. Consent Management on Blockchain Obtaining explicit and informed consent from individuals is essential for personal data to be lawfully processed on a blockchain. This consent must cover the nature of the blockchain's immutability and its implications for the user's personal data. While blockchain data cannot be altered, mechanisms can be developed to ensure that consent, once given, can be revoked. This may involve complex technical solutions, such as encrypting the data on the blockchain and making the decryption key inaccessible upon consent withdrawal (still poses risks under GDPR). Compliance Strategies Data Minimization: Adhering to data minimization principles, where only necessary data is collected and processed, can reduce the impact of blockchain's immutability on personal data protection. Off-Chain Data Storage: Storing personal data off-chain while using blockchain only for verification purposes can be a strategy to balance immutability with data protection requirements. Anonymization and Pseudonymization: Employing techniques such as anonymization or pseudonymization of personal data before recording it on the blockchain can help reduce privacy concerns while maintaining the integrity of the blockchain. Identifying the Party in Agreement with Users Unlike traditional ToS with clearly defined parties (user and a legal entity-service provider), the decentralized nature of blockchain and Web3 technologies introduces a more complex dynamic. Possible Contractual Parties in Decentralized Systems DAO Mutual Acceptance: The whole DAO, as a collective of users governed by smart contracts, can hypothetically act as a mutual contractual party. Here, the agreement is between each user forming a collective community of a DAO, with terms potentially supported by the smart contract code governing user interactions. In certain decentralized systems, all users collectively agree to the terms through a voting process. The agreement may become effective when a majority or a predefined threshold of users vote in favor, reflecting the collective decision-making process inherent in decentralized systems. DAO as a Legal Entity: Certain jurisdictions are exploring the concept of recognizing DAOs as legal entities (Marshall Islands and Wyoming DAO LLCs, for example). In this scenario, a DAO itself is considered the party to the agreement. Platform Operators or Developers: When a decentralized application (dApp) is developed and maintained by a specific team or company, that entity could serve as a contracting party. This approach aligns more with traditional contract models but may not fully represent the decentralized nature of the platform and might be very risky for the core team. Network Participants: In decentralized systems, especially those on a peer-to-peer model, each participant or node could be a party to an agreement. Hybrid Models: Contractual parties in decentralized systems could involve hybrid models. For example, a company-developed dApp might operate under a DAO governance model, combining the roles of platform operators and DAO stewards. DAO Legal Wrapper as a Legal Entity: In some cases, a legal entity, such as a DAO legal wrapper, can act on behalf of a decentralized project. This legal wrapper provides a formal structure, allowing the DAO to engage in contracts and legal processes while maintaining its decentralized governance model. What We Offer Prokopiev Law Group offers specialized legal support to ensure compliance and protection of Web3 projects. Our expertise and the partnership network cover key legal aspects and can help, for example, with Web3 Terms of Service, Token Sale, and Web3 Intellectual Property Protection. We offer Web3 Compliance Strategies and Decentralized Finance (DeFi) Legal Consulting services. Our team and partners are adept at addressing the nuances of DAO Governance Legal Frameworks and ensuring adherence to Data Protection Laws. Prokopiev Law Group is equipped to provide the legal insight and strategy necessary for the success and security of your Web3 endeavors. Please read more about a DAO legal support here. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

In our extensive Knowledge Base, we have frequently discussed various aspects of Decentralized Autonomous Organizations (DAOs). This article encapsulates the essential legal aid for a DAO's success. What is a Decentralized Autonomous Organization (DAO)? A DAO represents a paradigm shift in the way collective decision-making and business operations are conducted. At its core, a DAO is an entity that operates through rules encoded as smart contracts on a blockchain. These smart contracts strive to be self-executing and do not require an intermediary to function, hence the term 'autonomous.' The 'decentralized' aspect comes from the fact that control over the DAO is typically spread across a wide array of members rather than being concentrated in the hands of a few individuals or a single central authority. Key Characteristics of DAOs Blockchain-Based: DAOs mostly rely on blockchain technology, which ensures transparency and immutability of records. Every transaction and decision is verifiable and permanently recorded on the blockchain. Smart Contract Driven: The rules governing a DAO are embedded in smart contracts. These are programmed instructions that execute automatically when predefined conditions are met, eliminating the need for manual intervention. Member-Controlled: Unlike traditional organizations, DAOs are usually governed by a group of stakeholders rather than a centralized leadership. Decision-making powers are often distributed among token holders, who can propose and vote on governance decisions. Legal Status and Recognition The legal status of DAOs varies across jurisdictions. Traditionally, they do not fit neatly into existing legal frameworks due to their decentralized and digital nature. This challenges defining legal liability, governance structure, and regulatory compliance. Main Legal Challenges Facing DAOs DAOs encounter a myriad of legal challenges that may be critical to addressing their successful operation and legitimacy. Here are the main legal hurdles DAOs face: Defining Legal Status: As was mentioned, DAOs do not fit conventional legal categories, creating ambiguity in their legal recognition. This poses challenges in establishing a DAO's legal personality, which is essential for entering contracts, owning property, and being held liable. Liability Issues: Traditional legal frameworks may default a DAO to a general partnership, potentially exposing its members to unlimited liability. Governance and Regulation Compliance: DAO governance structures hardly comply with existing laws and regulations. This includes the enforceability of token-based voting systems and adherence to securities, tax, and corporate laws. Smart Contract Legalities: While smart contracts automate decision-making and operational processes, they also raise questions about legal enforceability, especially when disputes arise or if the contract contains flaws. Asset Management and Protection: This is about legal frameworks for managing collective assets controlled by smart contracts. Intellectual Property Rights: DAOs, often collaborative and open-source entities, face unique challenges in managing intellectual property rights within their decentralized structure. Jurisdictional Issues: Since DAOs typically operate globally, they must navigate varying legal jurisdictions, which can be complex due to differing regulations and enforcement mechanisms across countries. Data Privacy and Security: Compliance with data protection and privacy laws, such as GDPR, is vital, especially considering the transparent nature of blockchain technology. Fundraising and Securities Regulations: DAOs must be cautious in their fundraising activities to ensure compliance with securities laws, particularly when issuing tokens that may be classified as securities. Dispute Resolution Mechanisms: Establishing clear and legally sound procedures for internal dispute resolution is necessary, considering the decentralized nature of DAOs. Incorporation of DAOs Due to their novel structure and operation, incorporating Decentralized Autonomous Organizations (DAOs) presents a legal challenge. The main possible options are: Traditional Corporate Entities: Some DAOs choose to incorporate as traditional legal entities, such as Limited Liability Companies (LLCs), to gain legal recognition. This approach provides a legal framework for liability protection, taxation, and contractual relations but may conflict with the decentralized ethos of DAOs. Hybrid Structures: Several jurisdictions have introduced legal frameworks that attempt to merge traditional corporate structures with the decentralized nature of DAOs. For example, Marshall Islands or Wyoming's DAO LLCs offer models that provide the legal status of DAOs. Foundations Stewarding DAO Operations: In the context of DAOs, a foundation can act as a steward, managing the DAO's operations and assets. Foundations provide a more centralized governance structure, which can be beneficial for managing legal and regulatory compliance. Trusts: Trusts provide a legal mechanism for asset protection and can be tailored to suit the specific needs of a DAO. They offer flexibility in how assets are managed and distributed. The use of trusts involves appointing reliable trustees and clearly defining their duties and responsibilities. Companies Limited by Guarantee: Members of companies limited by guarantee do not hold shares; instead, they guarantee to contribute a nominal amount. It can be a viable option for DAOs, particularly those with non-profit objectives. Our previous articles explored the legal frameworks and incorporation options for Decentralized Autonomous Organizations (DAOs) across various jurisdictions. These include, for example, Jersey, Guernsey, Switzerland, Cayman Islands, Cook Islands, and Panama. Each of these jurisdictions offers unique legal perspectives and structures that can be leveraged for DAO incorporation and operation, reflecting the diverse global landscape of DAO legal considerations. Our Legal Support for DAOs Our firm specializes in providing legal support to DAOs, addressing their complex challenges. Our services ensure that DAOs operate within legal frameworks, mitigating risks and enhancing operational efficiency. We offer counsel on structuring DAOs to clarify participant liabilities, ensuring token-based governance complies with legal standards, and crafting legal frameworks for asset management. Additionally, we assist in forming enforceable community agreements, defining the legal status of DAOs, and establishing dispute resolution mechanisms. Our approach is tailored to the unique needs of each DAO, providing them with the legal foundations necessary for success in the dynamic and evolving landscape of digital and decentralized entities. Please visit Prokopiev Law Group Services for DAOs for detailed information on our services. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

In the context of the ratification and adoption of the Markets in Crypto-Asset (MiCA) Regulation by the European Union in April 2023, an aspect that has garnered substantial discourse is its application to decentralized finance (DeFi) projects. Central to this debate is the interpretation of Recital 22 within the MiCA framework, specifically its efforts to delineate and potentially exclude projects deemed "fully decentralized." This term, however, remains legally and conceptually nebulous, lacking a universally accepted definition. Under Recital 22 of MiCA, it applies "including when part of such activities or services is performed in a decentralised manner." However, "Where crypto-asset services are provided in a fully decentralised manner without any intermediary, they should not fall within the scope of this Regulation" [emphasis added]. Obviously, disintermediation and decentralization are what MiCA requires from DeFi to be excluded from the Regulation, but what does it mean? We tried to answer this question in our article published after MiCA was ratified and adopted. Now, with its second Consultation Paper (link below), the European Security Markets Authority (ESMA) will help us by adding a bit more clarity (emphasis added): "98. Alongside CEXs, Decentralized Exchanges (DEXs) present a different way to trade crypto-assets. On DEXs, there is no central operator and, as a consequence, no central control over users' assets. Instead, users keep control of their assets by interacting with the distributed ledger (i.e. blockchain) using a self-custody wallet. With DEXs, the blockchain takes the place of the intermediary. DEXs use autonomous code (often referred to as a 'smart contracts'), to execute trades directly on the settlement layer of the blockchain (with differing degrees of decentralisation). 99. DEXs may run an order book but also less traditional models such as Automated Market Makers (AMMs). These decentralised models are increasingly becoming important in particular in decentralised finance (DeFi). Under these AMM models, contrary to CLOBs [author's note: central limit order books] where market makers post bid and offer prices on the order book, the liquidity provision process is decentralised, relying on aggregated pools of liquidity (often comprised of a token pair, e.g., Ethereum (ETH) to USD Coin (USDC)) and on a mathematical formula (e.g., a constant product function) to price assets. The execution price is generally determined based on how many assets an order would consume in the concerned pool of liquidity and the resulting unbalanced quantities of asset between the related pools." In summary, ESMA's criteria for understanding a "fully decentralised" manner under MiCA focus on: the absence of a central operator, the use of autonomous code in executing trades, and the decentralization of liquidity provision processes. Also, we can see the following in ESMA's Consultation paper: "108. Finally, regarding DEXs, ESMA acknowledges Recital 22 of MiCA that “(…) Where crypto-asset services are provided in a fully decentralised manner without any intermediary” should fall outside the scope of MiCA but also notes that the exact scope of this exemption remains uncertain. ESMA considers that an assessment of each system should be made on a case-by-case basis considering the features of the system. In this context, ESMA considers it useful to clarify how pre-trade transparency should apply to such protocols. This is without prejudice to any possible clarification that can be published in the future regarding the scope of the exemption for fully decentralised systems." Taking this into account, we can summarize the following key points: Ambiguity in Regulatory Exemption Boundaries. ESMA acknowledges that while Recital 22 suggests such services should ideally be outside the MiCA scope, the precise boundaries of this exemption remain indeterminate. Individualized System Assessment Approach. ESMA proposes a nuanced, case-by-case evaluation of each system to address these ambiguities. Clarifying Pre-Trade Transparency in Decentralized Protocols. ESMA highlights the need for clarity on how pre-trade transparency regulations should apply to decentralized protocols. Pre-trade transparency is a cornerstone of financial regulation to ensure fair and efficient markets. However, applying such regulations to decentralized protocols is challenging, given the absence of traditional intermediaries and centralized control mechanisms. Evolution of Regulatory Interpretations. Current interpretations are not final and may evolve. ESMA leaves open the possibility of future clarifications or adjustments to the regulatory approach for fully decentralized systems. Also, according to ESMA [emphasis added]: "‘permissionless distributed ledger technology’ means a technology that enables the operation and use of distributed ledgers in which no entity controls the distributed ledger or its use or provides core services for the use of such distributed ledger, and DLT network nodes can be set up by any persons complying with the technical requirements and the protocols." Key characteristics we can derive from the definition: No Central Control: No single entity shall exercise control over the ledger, extending not only to its operation but also to its usage. A single entity must not be in a position where its provision of core services is deemed vital for the operation of the ledger. Open Participation: Any individual or entity can set up nodes in the DLT network, provided they meet the technical requirements and adhere to the network's protocols. Absence of Core Service Providers: In a permissionless DLT, no designated entities provide core services essential for the operation of the distributed ledger. Obviously, the concept of decentralization within the context of distributed ledger technology (DLT) and Decentralized Finance (DeFi) does not possess a definitive endpoint or universally agreed upon criteria. However, three subsequent points can be distilled to minimize the risk of MiCA application: Identification and Evaluation within MiCA Scope: To ascertain exclusion from MiCA application, the first requisite is evaluating whether an individual or entity meets the definition of a Crypto-Asset Service Provider (CASP) as outlined in Article 3(1)(15) of MiCA. Subsequent to this identification, the next step is to assess if the individual or entity is engaged in providing any of the specific crypto-asset services as listed in Article 3(1)(16). Decentralization in Functional Roles: A higher degree of decentralization should be achieved with more participants involved in various functions, like development, consensus mechanism, and node operation. No threshold should be set for decentralization, as this would imply permissioned control. Multiplicity of Access Points: For DeFi technologies, having multiple front-ends for accessing smart contracts is crucial. This minimizes the reliance on a single entity for access and operation, promoting decentralization. ESMA Consultation Paper: Technical Standards specifying certain requirements of Markets in Crypto Assets Regulation (MiCA). * * * At Prokopiev Law Group, we specialize in navigating the complex terrain of MiCA Regulation and its implications for Decentralized Finance (DeFi) and blockchain technologies. With our extensive global network of partners, we offer comprehensive legal support, from DAO governance and Web3 compliance strategies to cryptocurrency legal risk assessments and smart contract analysis. Whether you're dealing with crypto regulation advisory, NFT intellectual property rights, or developing Web3 anti-money laundering policies, our team is equipped to ensure your compliance in the EU and worldwide. For expert guidance in this rapidly evolving digital landscape, reach out to us and secure the future of your innovative projects. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Decentralized Autonomous Organizations (DAOs), similar to traditional organizations, consist of individuals pooling resources to achieve a collective goal. Unlike traditional setups with hierarchical leadership like CEOs, DAOs can operate democratically, with each member having equal rights in governance and control of assets, primarily via cryptocurrency. What is a Multisig Wallet? A multi-signature (multisig) wallet represents a type of digital wallet designed to require multiple signatures, or approvals, from different users before executing a transaction. For instance, in a 10-member multisig wallet with a 70% signature requirement, a transaction executes upon obtaining seven signatures. This structure enhances security compared to traditional single-signature wallets, where only one private key is needed for access and transaction authorization. In a multisig wallet, each user possesses a unique private key, and a predefined number of these keys must collectively authorize a transaction before execution. The underlying principle of a multisig wallet is to distribute control among several parties, thereby reducing the risk associated with a single point of failure. DAO vs. Multisig Wallet Fundamentally, DAOs are structured around two main elements: Collective Decision-Making: This involves engaging all members in a democratic voting process. Management of Digital Assets: Focused on the secure storage and communal distribution of assets. A simple governance model of a DAO can be compared to the operation of a multisig wallet. Consider, for example, a multisig wallet utilized by a couple to manage their shared savings. Both individuals possess equal decision-making power in this setup and must jointly consent to any financial transactions, mirroring a basic DAO setup for managing funds. At a minimum, several individuals should hold the keys to the DAO's wallet. Optimal security is achieved when fund transfers require the consent of a governing body, ensuring checks and balances in decisions. DAOs generally feature more complex governance structures than multisig wallets, especially regarding voting and administrative control. The governance in DAOs often revolves around specific, non-transferable tokens, which require a collective agreement for any transfer of ownership. In DAOs, decision-making is contingent upon achieving a quorum, which is a minimum level of participation needed to validate decisions. This contrasts with multisig wallets, where the quorum is based on a defined number of participant signatures. In the context of DAOs, this quorum is typically a proportion of the total governance tokens issued, allowing for a flexible and adaptable decision-making process that can be aligned with the organization's strategic objectives. The rules for distributing governance tokens are custom-tailored to each DAO's specific nature and goals, providing a dynamic and broad-ranging governance model. This system enables the integration of both off-chain and on-chain voting processes. While governance tokens in DAOs serve a protective function similar to multisig wallets, the broader participation base in DAOs introduces additional complexity in achieving consensus, especially for decisions requiring a high quorum. DAO Legal Wrapper Utilizing a Multisig Wallet A DAO legal wrapper refers to the legal structure encompassing a Decentralized Autonomous Organization, providing it with a formal and recognized legal status. This legal framework is crucial in bridging the gap between the digital, decentralized nature of DAOs and the traditional legal system. In this context, a multisig wallet can be instrumental in manifesting consent among a legal entity's officials. For instance, when a foundation is established to steward DAO operations, it typically has a council or board. This council may be responsible for managing the foundation's assets and executing decisions made by the DAO. For on-chain activities, such as amending smart contracts or initiating transactions, the council can employ a multisig wallet. The foundation might also appoint an official protector, chosen by the DAO, to supervise the council's activities and authorize significant transactions. In this setup, the protector could also be one of the signatories in the multisig wallet arrangement. Alternatively, the DAO might opt to assign multisig signatories from its membership who are not formal officials of an entity designed as a DAO legal wrapper. Global legal regulations surrounding DAOs are still developing. As a result, documenting decision-making processes can pose challenges but remains necessary. This documentation is essential for legitimizing the actions of all participants within the protective shield of DAO legal structures rather than treating their actions as independent individuals without a corporate veil. The prevailing legal perspective currently suggests that authorization via a multisig wallet does not entirely replace, for example, the need for a traditional general meeting. Despite this, integrating a multisig wallet within a DAO's legal framework offers a novel approach to ensuring accountability and transparency in decision-making, aligning the decentralized ethos of DAOs with the requisites of the legal domain. Challenges in Utilizing Multisig Wallets in DAOs One significant issue is the possibility of multisigs acting contrary to the will of the DAO community or voters. In cases where tokens are used primarily for signaling purposes without providing actual executive control, there is a risk that the actions of multisigs may gradually deviate from the community's interests. Multisig wallets, typically having a limited number of identifiable signatories, can become conspicuous targets for government regulation and legal actions. The clarity in the identity of these signers makes it easier for regulatory bodies to enforce compliance or for legal entities to initiate actions against them. Additionally, the discretion exercised by multisig signers in executing their authority could give rise to liability issues. The concentrated authority in a small group of multisig signers can also present challenges in terms of censorship resistance. In contrast, a more distributed set of token holders could offer a higher degree of resistance to censorship. This distribution dilutes the concentration of decision-making power, reducing the likelihood of any single point of control becoming a target for external pressures or attacks. Case Study: Transitioning from Multisig Governance to Smart Contract-Based DAO In DAOs, it is imperative to avoid situations where a single person or a small group has exclusive control over the DAO's resources, as this could lead to unauthorized fund usage. Ideally, DAO funds should be secured in a smart contract, endorsed by the community, and governed by rules that prevent centralization of control. A DAO-specific smart contract can be developed and implemented to address the discussed challenges. This contract, an adaptation of an existing model but customized to meet unique needs, may include an innovative mechanism for asset voting. It also features a guardian as a temporary control measure that can veto proposals or modify governance parameters during the initial phase for added security. In a new governance structure, any member can propose changes for community review. Once a proposal secures adequate community backing, it is set for execution, contingent on meeting the quorum and supermajority criteria. The evolution to an advanced governance model can be executed in several stages: Initial Deployment: The DAO contract should be launched on the mainnet without administrative control over associated contracts. Administrative Transition: This step entails configuring the DAO as the administrator for all current contracts. This process involves adding the DAO contract as a co-administrator and progressively diminishing the administrative role of the multisig contract. Acceptance of DAO as Administrator: For contracts requiring the proposed administrator to affirmatively accept the respective DAO role. Multisig Contract Removal as Administrator: Following a sequence of successful proposals, the multisig contract relinquishes its administrative responsibilities, positioning the DAO contract as the sole administrator. Final Phase – Elimination of the guardian: The concluding stage is the community vote to remove the guardian functionality, solidifying the DAO's complete autonomy. * * * For expert guidance in the dynamic world of DAOs and Web3, Prokopiev Law Group is your legal partner. With a broad global network, we ensure your compliance both in the EU and internationally. Our services include DAO Legal Support, Crypto Token Sale Legal Advice, Web3 Terms of Service, and Intellectual Property Protection in blockchain and NFTs. We specialize in Smart Contract Legal Analysis, Crypto Regulation Advisory, and Web3 Compliance Strategies. Our team is adept at handling Blockchain Data Protection Laws and providing Decentralized Finance (DeFi) Legal Consulting. Prokopiev Law Group is committed to guiding you through the legal intricacies of the blockchain and cryptocurrency sectors, ensuring your project thrives in a compliant and secure legal environment. Contact us for bespoke legal solutions tailored to the unique needs of your Web3 venture. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

What is XLA? Experience Level Agreements (XLAs) represent a shift from traditional Service Level Agreements (SLAs) in IT service management. Fundamentally, XLAs are structured around the end-user experience, emphasizing IT services' perceived quality and effectiveness rather than just operational metrics. They prioritize outcome-based metrics and key performance indicators directly related to the user's interaction with IT services. XLAs offer a more holistic approach to IT service delivery, focusing on the satisfaction and productivity of the end-user. This contrasts with the traditional SLA framework, which often centers on meeting predefined operational targets without necessarily reflecting the real-world impact on service users. Furthermore, implementing XLAs entails a shift, promoting a more responsive and adaptive approach to service delivery, which involves regularly revising XLA targets and metrics in response to changing user expectations and needs. Therefore, the primary distinction between these two types of agreements lies in their orientation: SLAs concentrate on the objective aspects of service performance, whereas XLAs are attuned to the subjective perceptions of service quality from a customer's standpoint. The Interplay of SLAs and XLAs The web3 sector, characterized by its rapid evolution, is increasingly adopting a client-focused approach. This shift is reflected in the parallel usage of Experience Level Agreements (XLAs) alongside the conventional Service Level Agreements (SLAs). While an SLA might quantify aspects like service resolution times from a provider's lens, an XLA evaluates the level of customer satisfaction following the receipt of services. XLAs are not intended to replace SLAs but to enhance them or operate as independent agreements in situations where SLAs do not fully encapsulate the essence of service success. Incorporating XLAs introduces additional considerations, including the assessment of new risks by procurers and providers, especially in ensuring adequate insurance for these risks. Service Level Agreements (SLAs) The core purpose of an SLA is to delineate specific standards and benchmarks for service delivery. An effective SLA serves as an intermediary mechanism for addressing breaches, thus helping to prevent the escalation to contract termination due to significant non-compliance. Essential elements to be factored into an SLA include: Defining Critical Events and Criteria: It is imperative to clearly specify what constitutes a significant or critical event within the scope of the SLA. It involves setting precise definitions and criteria that identify situations warranting special attention or immediate action. Establishing Reporting Systems and Monitoring Tools: Implementing and managing monitoring systems and tools are essential. These systems should be capable of accurately tracking service performance and facilitating regular reporting, ensuring that both parties clearly understand service standards. Setting Service Credit Parameters: A critical aspect of an SLA is establishing the parameters for service credits. It involves determining the fair and proportionate values of the services provided, ensuring that they effectively incentivize maintaining service standards. Outlining Acceptable Timeframes for Responses and Resolutions: The SLA must clearly define the acceptable timeframes for responding to and resolving service issues. These timeframes should be reasonable, reflecting a balance between prompt service and the complexity of potential problems. Designating Primary Contacts and Escalation Points: Identifying primary contacts and establishing escalation points for all parties involved in the SLA ensures efficient communication and swift resolution of issues, providing a clear pathway for escalation when necessary. Detailing Exceptional Circumstances: The SLA should explicitly state any exceptions to the standard service provisions, such as scheduled maintenance periods. Developing Structured Processes for Claiming Service Credits: An agreement should include a straightforward, transparent process for claiming service credits. Experience Level Agreements (XLAs) XLAs serve as a critical tool where traditional Service Level Agreements (SLAs), with their quantitative emphasis, may not adequately capture the essence of customer satisfaction. The following elements are key in the formulation of an XLA: Comprehensive Key Performance Indicators (KPIs): A core component of XLAs is the integration of KPIs that are specifically targeted at measuring customer satisfaction. Mechanisms for Customer Feedback and Engagement: Besides SLA communication flow, such mechanisms should facilitate an open dialogue between the service provider and the customer, allowing for continual improvement and adaptation of services based on customer input. Evaluation Metrics for Customer Endorsement: It is essential to incorporate metrics that assess how likely customers are to recommend the service. Checklist for Crafting SLAs and XLAs in Web3 Integration of Customer Feedback in SLA/XLA Development: Actively involve customers in creating SLAs and XLAs, focusing on customer satisfaction and experience. Adaptation of Contracts to Value-Oriented Models: Shift from time-based to value-based contracts, emphasizing outcomes such as incident resolution efficiency or revenue generation. Implementation of Customer Effort Score (CES) Tracking: Employ CES to gauge the effort customers require to use a service or resolve issues, providing deeper insights than traditional metrics. Customizable Service Experiences for Clients: Offer flexible "pick your path" service options, allowing customers to tailor their SLAs/XLAs. Establishment of Higher Internal SLA Standards: Set internal SLAs that are more stringent than those communicated to clients. Transformation of SLAs into Objectives and Key Results (OKRs): Evolve traditional SLAs into OKRs, fostering a partnership-centric approach in customer-vendor relationships, aligning well with the collaborative and outcome-focused nature of Web3 and DAO entities. DAO-Specific Considerations for Service Level and Experience Level Agreements In the unique ecosystem of Decentralized Autonomous Organizations (DAOs), the concept of Service Level Agreements (SLAs) and Experience Level Agreements (XLAs) takes on a new dimension. DAOs, known for their decentralized governance structures, may provide web3 services both internally to their members and externally to third parties. As such, they face the dual challenge of maintaining service quality and user experience without the traditional framework. Given the inherent nature of DAOs, where formal contract signing may not be feasible, alternative approaches are needed. One such approach is adopting a publicly declared document outlining the service level the DAO commits to uphold. This document, while not a contract in the traditional sense, serves as a statement of intent or a pledge to maintain specific standards of service and user experience. The development of this document should be a collaborative process involving thorough discussions among DAO members. It necessitates going through the DAO's governance procedures, which may vary from one DAO to another but typically involve voting or consensus mechanisms. This process ensures that the service standards set forth are not only realistic but also align with the collective vision and capabilities of the DAO community. Furthermore, despite lacking a conventional corporate structure, DAOs must still assign responsibility for essential functions related to SLAs and XLAs. This includes designating individuals or groups responsible for client communication and integrating customer and member feedback into service enhancements. * * * At Prokopiev Law Group, we understand the intricacies of navigating the evolving landscape of Web3, DAOs, and the broader blockchain ecosystem. Our expertise encompasses various vital legal areas, including DAO Legal Support, Web3 Compliance Strategies, Crypto Token Sale Legal Advice, and more. Our global network of partners ensures comprehensive legal compliance in the EU and worldwide. Reach out to us for a thorough legal risk assessment and compliance strategies or to understand the complex legal landscape of your Web3 Startup. Let us help you navigate these waters with confidence and compliance. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

Regulatory Insight for Blockchain Protocols In the realm of blockchain and distributed ledger technology (DLT) protocol governance, Taiwan's regulatory landscape is yet in its formative stages, absent of a comprehensive legal structure. Despite this regulatory vacuum, the prevalence of blockchain demands anticipation of forthcoming legislation. Developers venturing into this field must tread carefully across several critical domains: Securities in the Digital Age: The Financial Supervisory Commission (FSC) parallels tokens birthed from initial coin offerings with conventional securities. Under the Securities and Exchange Act, such tokens, if acknowledged as securities due to their investability and marketability, subject issuers to regulatory compliance and licensing requisites. Digital Defense Protocols: In the event of a compromise within a blockchain network, developers may find themselves liable for damages, as mandated by the Civil Code, given the expectation to fortify their networks against cyber threats. Data Privacy Concerns: The integration of user data within blockchain platforms mandates adherence to the Personal Data Protection Law, safeguarding user privacy throughout the collection, processing, and utilization phases. Combatting Financial Crimes: The global crusade against money laundering extends into the digital realm, with Taiwan adhering to the Financial Action Task Force's guidance and enforcing stringent regulations on cryptocurrency exchanges to thwart such activities. Variations in Public and Private Blockchain Oversight The surveillance for public and private blockchains deviates markedly, with the former shouldering heightened scrutiny due to the expansiveness and anonymity of participants: Anonymity vs. Privacy: The immutable nature of public blockchains contrasts starkly with the regulated node environment of private blockchains, complicating the alteration or erasure of private data. Money Laundering Preventions: The 'know your customer' (KYC) protocols are more seamlessly woven into the fabric of private blockchains, facilitating user identification. Public blockchains, with their non-identifiable wallet addresses, present formidable challenges to upholding KYC standards, necessitating extra diligence from developers to mitigate privacy and anti-money laundering (AML) risks. Enforcement Agencies and Their Domains Taiwan's enforcement of applicable laws spans multiple administrative bodies, each vested with oversight relevant to their sector: Financial Supervisory Commission (FSC): As the appointed authority on March 30, 2023, the FSC oversees virtual asset platforms, emphasizing customer protection through comprehensive guidelines that include transparency, AML efforts, and asset management. Ministry of Justice: This body extends its regulatory arm to virtual currency platforms under the Money Laundering Control Act, equipped with the authority to confiscate proceeds from criminal activity. Executive Yuan: Reflecting the varied applications of blockchain, the Executive Yuan ensures consumer protection across diverse industry uses, from traceability systems to tourism. Regulatory Definition and Oversight of Digital Currencies The framework for overseeing digital currencies is provided by the Financial Supervisory Commission (FSC), particularly under the guidelines introduced on June 30, 2021. Digital currencies are characterized under these guidelines as cryptographic representations of value, which are digitally tradable and can serve as a medium for payment or investment but are distinct from certain financial assets and government-issued currencies. Entities that facilitate digital currency transactions are mandated to adhere to stringent regulations aimed at preventing money laundering and terrorism financing. This adherence extends to cryptocurrencies that fulfill specific criteria indicative of securities, which are then regulated under the Securities and Exchange Act. Further, political figures and high-ranking officials must disclose their digital currency holdings, underscoring the transparency required in public service. Anti-Money Laundering Measures for Digital Currencies The national Ministry of Justice, tasked with anti-money laundering (AML) and counter-financing of terrorism (CFT) efforts, has categorized digital currency exchanges and related businesses as financial institutions within the scope of the Money Laundering Control Act. These entities must undertake identity verification and transaction monitoring processes, a directive that challenges the inherently anonymous nature of cryptocurrency transactions. Consumer Safeguards in Cryptocurrency Transactions Cryptocurrency is regarded as a 'virtual commodity' rather than a financial product, thus evading the protection mechanisms typically available to financial consumers. This classification is subject to exceptions, such as security-type digital currencies, which fall under securities regulations. Taxation Stance on Cryptocurrency Tax implications for cryptocurrency transactions are complex and contingent on the nature and location of the transaction and the parties involved. Business-related cryptocurrency transactions are taxable as business income, while individual transactions may be taxed differently. Notwithstanding, challenges persist in enforcing tax compliance due to the anonymity inherent in cryptocurrency dealings. Operating Standards for Cryptocurrency Traders and Exchanges Please refer to the above discussions under sections concerning regulatory oversight and anti-money laundering measures. Delineation and Regulation of Cryptocurrency Offerings The FSC delineates virtual currencies as securities based on the Howey Test, thereby subjecting them to relevant securities legislation. Initial coin offerings (ICOs), unless falling under specific financial product characteristics, remain unregulated by the Securities and Exchange Act. Legal Contract Fulfillment through Smart Contracts No specific legislation governs smart contracts; their regulation is inferred from their applications in various sectors. Government-funded research explores the potential of smart contracts in areas like insurance and shared vehicle services, which indicates a growing interest in and validation of blockchain technology. The Civil Code specifies core requisites for contract formation which smart contracts are capable of satisfying under certain conditions. These include the contracting parties' legal capacity, mutual consent, and the legality of the contract's subject matter. Nevertheless, smart contracts introduce complexities regarding the parties' continuous capacity and the validation of consent, which are challenging to address post-execution. Smart contracts are particularly adept at automating straightforward transactional aspects of traditional contracts, such as payments, based on unambiguous conditions. However, they cannot replace elements requiring nuanced human judgment, such as confidentiality clauses or definitions of breach. The enforceability of smart contracts through judicial systems poses significant challenges, given the technical nature of blockchain and the difficulty in establishing jurisdiction and interpreting 'intent' in code form. Blockchain and Data Protection When data is stored on a public blockchain, it becomes accessible to anyone, posing significant risks when personal data is involved. This is especially problematic when considering the following aspects: Immutable Data versus Personal Data Rights: The immutable nature of blockchain stands in conflict with personal data rights enshrined in the Personal Data Protection Act (PDPA), notably: The right to halt data collection, processing, or use; The right to demand the erasure of personal data. Modification of blockchain data can only be achieved through disproportionately challenging means, such as commandeering over half of the network’s computational power, which is practically unfeasible. Cross-Border Data Transfers: The PDPA’s framework for international data transfers includes potential exceptions enforceable by the pertinent authority. A problem arises when data traverses through the blockchain to jurisdictions lacking robust data protection regulations, raising questions on how authorities can monitor such transfers and apply necessary restrictions. As a solution, some experts have suggested 'off-chain' data storage, whereby personal data is stored on a separate platform and only linked to the blockchain. Yet, this introduces additional concerns about ensuring off-chain data security, maintaining privacy, and achieving data consistency with the blockchain. Benefits of Blockchain in Data Protection: On the flip side, blockchain technology can enhance data integrity and availability through its decentralized architecture, which distributes data across numerous points, mitigating the risks of single-point failures. Its inherent transparency and synchronous updating can serve as an asset for instances where data authenticity is critical and a shared, unalterable ledger offers a secure method for data sharing. Intellectual Property and Blockchain Blockchain's borderless nature and decentralized applications (DApps) span multiple jurisdictions, leading to complex legal landscapes. For instance, the determination of international legal jurisdiction in intellectual property (IP) disputes over blockchain creations hinges on the domestic legislation of the country in question. Taiwanese law, specifically, does not delineate international jurisdiction. Nonetheless, Taiwanese jurisprudence may invoke the Code of Civil Procedure to establish jurisdiction, particularly when infringement activities or their effects manifest within Taiwan. The scope and duration of intellectual property rights associated with blockchain and DApps are contingent upon the legal system the claimant operates under. The utilization of open-source resources in developing blockchain and DApps presents a conundrum for IP protection since such resources are accessible to the public. The innovation and uniqueness required for patentability and copyright under Taiwanese law might be deemed insufficient in open-source-based developments. Nevertheless, when original contributions are integrated, such blockchain constructs may qualify as derivative works, thereby securing copyright protection. With the proliferation of NFTs, the replication and dissemination of digital works via these platforms may impinge on copyright statutes, especially when physical copies are associated. This raises significant concerns for copyright holders when their works are traded without consent. Global Web3 Legal Expertise at Prokopiev Law Group Prokopiev Law Group stands at the forefront of legal innovation, embracing the complexities of the evolving digital landscape. As a dedicated blockchain law firm, we possess a robust partnership network that spans across borders, allowing us to offer comprehensive Web3 legal advice and solutions on a global scale. Whether our clients are navigating cryptocurrency legal issues, NFT legal matters, or the foundational DAO legal structure, our expertise ensures their ventures are built on solid legal ground. With a keen understanding of Web3 intellectual property rights and a meticulous approach to DeFi legal consultancy, we empower our clients to forge ahead with confidence. Prokopiev Law Group is adept in addressing the nuances of Web3 compliance and provides token sale legal guidance. Our practice is a nexus of knowledge for entities operating in the metaverse law arena and those seeking Web3 startup legal support. We are committed to safeguarding Web3 data privacy and protection and stand as a staunch advocate for those seeking a crypto exchange regulation lawyer. The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.

On 17 October 2023, the Council of the EU announced the adoption of a crucial directive to further administrative cooperation within the realm of taxation. This directive primarily targets the reporting and exchange of information relating to transactions in crypto-assets and advance tax rulings for high-net-worth individuals. Key Provisions of the Directive: Enhanced Scope of Registration and Reporting: The directive aims to fortify the prevailing legislative architecture. It expands the breadth of registration and reporting duties, ensuring a more robust collaboration among tax authorities. Inclusion of Crypto-assets: Previously, the decentralized character of crypto-assets presented challenges for member states' tax departments to maintain tax adherence. With the cross-border nature of crypto-assets, international administrative collaboration becomes vital. This directive encompasses: A wide variety of crypto-assets, with foundations on definitions from the MiCA (regulation on markets in crypto-assets). Decentralized issued crypto-assets. Stablecoins, e-money tokens, and select NFTs (non-fungible tokens). Automatic Information Exchange: Reporting entities handling crypto-assets will now have to engage in obligatory automatic sharing of details with tax bodies. This initiative addresses the past hurdles caused by crypto-assets' decentralized nature. Historical Context and the Path Forward: In December 2021, the Council emphasized the expectation of a legislative proposal for 2022. This proposal would focus on the directive 2011/16/EU on administrative cooperation regarding taxation. The emphasis would be on information exchange about crypto-assets and tax rulings for affluent individuals. By December 2022, the Commission proposed amending the aforementioned directive (now referred to as DAC8). Noteworthy objectives of DAC8 include: Expanding Information Exchange: The idea is to increase the domain of automatic info-sharing under DAC to cover reports from crypto-asset service entities about crypto-asset and e-money transactions. This move hopes to aid member nations in tackling the challenges ushered in by the digital transformation of the economy. Moreover, DAC8’s provisions on due diligence, reporting obligations, and related rules for crypto-asset reporting will echo the CARF (Crypto-Asset Reporting Framework) and modifications to the CRS (Common Reporting Standard). Both these standards received an endorsement from the G20. Broadening of Tax-Relevant Information Exchange: This encompasses sharing details on advance cross-border rulings for wealthy persons and information exchange on non-custodial dividends. The goal is to diminish tax evasion, avoidance, and fraud risks. The existing DAC provisions didn’t cater to such income types. Refinements to DAC’s Existing Provisions: This entails enhancements to rules about Tax Identification Number (TIN) reporting and communication. Such improvements simplify the tasks for tax departments in identifying pertinent taxpayers and tax assessment. Additionally, there will be changes to DAC stipulations concerning penalties applied by member states for non-compliance with national reporting legislation aligned with DAC. In May 2023, the Council agreed upon its position about the directive's amendments. Subsequently, in September 2023, the European Parliament delivered its views on the directive. Concluding this chapter, the directive received unanimous approval by member states in the Council. Its publication in the Official Journal is forthcoming, with the directive coming into effect on the 20th day post-publication. Council directive amending directive 2011/16/EU on administrative cooperation in the field of taxation (DAC8) The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.