Legal Virtual Currency Listing Policy

Virtual Currency Listing Policy

General policy on the listing of virtual currencies on the Kriptomat exchange platform

1. Scope

At Kriptomat we are on a mission to enable crypto for everyone. Based on the principles of diversity and all in one place we enable our clients to choose from a variety of virtual currencies. By supporting different virtual currencies we wish to contribute to overall crypto adoption and support the crypto ecosystem. Each virtual currency is subject to a comprehensive internal due diligence audit before being placed on our exchange platform as we want to offer our clients only the best and most advanced virtual currencies that represent a derivative of reliable organizations that issued the virtual currency (hereinafter also “project” and/or “virtual currency issuer” and/or “organization”).

Kriptomat Listing Policy (the “Listing Policy”) intends to set up an internal framework for listing and the delisting process. The goal is to protect Kriptomat’s business and its clients by providing comprehensive and transparent information about the listing and delisting procedure and accompanying risks. The interested stakeholders of this Listing Policy are also virtual currency issuers who receive information about the conditions of their virtual currencies being listed or delisted.

Since the Estonian AML Act does not differentiate between different types of tokens and coins, we are using the term virtual currency to cover all types of tokens to be compliant with the terms as set in the applicable legislation.

2. Virtual Currency Listing initiation

The Listing initiative can be either

– internally initiated by Kriptomat’s team, or

– externally initiated by token issuers or based on clients’ suggestions.

For a virtual currency to be listed on the Kriptomat exchange platform it must align with our values and mission. Each virtual currency is submitted to an internal audit before being listed. The audit is aimed to evaluate various aspects of the virtual currency, both technical and legal as well as organisational in connection with the virtual currency issuer.

Kriptomat conducts regular general internal audits among all existing virtual currencies to determine the ones that are suitable to be listed on the Kriptomat exchange platform. Kriptomat adheres to the wishes of its clients and their suggestions on the new listings are included in regular general internal audits. Kriptomat implements due diligence virtual currency examination based on the best effort principle and based on available information and online research. Kripomat may decide to obtain information directly from the virtual currency issuers. In the event of their non-cooperation, it may decide to remove the virtual currency for their non-cooperation being recognized as insufficient project team support.

Virtual currency issuers may initiate the virtual currency listing by sending a listing application request to [email protected]. The virtual currency issuer receives a questionnaire followed by an internal due diligence examination of the potential listing.

The decision to approve or to reject a virtual currency to be listed is made unilaterally by Kriptomat and the rejection may be given without providing reasons. The listing application does not construe any obligation to the expectation that Kriptomat will list the virtual currency. Further, Kriptomat does not undertake any time limits for processing the application. We may also choose not to respond to the listing inquiry.

3. No Guarantee Disclaimer

The fact of the virtual currency is listed on the Kriptomat platform does not guarantee the relevance of the virtual currency, its value, short-term or mid-term growth, technical suitability of the solution, trust in the token issuer, or similar. The information on virtual currency is limited to the information we acquire mainly via an internet search, but such information may be untrue, partial, incomplete, outdated, or obsolete. The company does not assume any responsibility or provide any kind of guarantee for the listed tokens. The company expressly warns that any trading with virtual currencies is associated with high risks, and the value of virtual currencies is neither regulated nor guaranteed, on the contrary, it is subject to high volatility. The company assumes no responsibility for the purchase of tokens on its platform. Clients are required to familiarize themselves with the risks associated with using Kriptomat’s services, as disclosed in the Risk Disclaimer, and Terms of Service.

3.1. Virtual Currency With Withdrawal Limitations

The Company may limit withdrawals for certain virtual currencies for technical, compliance, or other reasons. Before purchasing such virtual currencies, clients will receive a special risk notice and will be required to confirm their understanding and agreement with the withdrawal limitations. The decision to implement these limitations is made solely by Kriptomat.

3.2. Virtual Currency With Greater Risk Exposure

For some tokens, Kriptomat may decide to include a special additional risk warning. This may either be a result of the virtual currency being sourced from a third-party platform, or there is an even greater risk with trading with such virtual currency eg. due to high volatility, and other reasons.

For certain virtual currencies, Kriptomat does not provide wallet infrastructure, meaning the virtual currency is kept outside the Kriptomat system (3rd party custodial service). Since the virtual currency is kept outside the Kriptomat system, Kriptomat cannot guarantee the same level of security as is subject to third-party custody and a security infrastructure system. Before purchasing such virtual currencies, clients will receive a special risk notice and will be required to confirm their understanding and agreement with 3rd party custodial. In no case shall be Kriptomat liable for any loss resulting from the loss of virtual currency due to circumstances on the side of such 3rd party.

Kriptomat strives to offer its clients the best service, and this in some cases includes clients with great risk appetite. Kriptomat may unilaterally decide to list virtual currency that is considered that are related to even greater risk than usual. For example, virtual currency is subject to the high volatility (even greater than usual for virtual currencies). Before purchasing such virtual currencies, clients will receive a special security notice and will be required to confirm their understanding and agreement of the risk warning, and shall be encouraged to trade with special caution. Kritpomat shall not be under any circumstance held responsible for any trading losses.

Clients will be required to confirm the Risk Statement which includes a comprehensive list and description of risks entailing trading with virtual currencies.

4. Due Diligence Audit

Due Diligence audit is divided into two parts: corporate profile review and virtual currency assessment criteria. Due diligence audit is being conducted in collaboration with different field experts (legal and compliance, information security, and business development).

Examples of the information taken into consideration when deciding on the listing are provided under section 3. The decision on the listing of virtual currency is made based on the outcome of the virtual currency audit assessment.

4.1. Corporate Profile Review

A corporate profile due diligence review is aimed to assess the reliability of the virtual currency issuer, the organizational structure, and the team behind it.

4.1.1. Basic Corporate Profile

The information on the organization that issued virtual currency is easily obtainable and verifiable;
The jurisdiction of the establishment is not blacklisted;
The organization has an office(s) (not just a virtual office);
The mission and vision of the organization are clearly defined;
The whitepaper is published as well as information on the project stage phases, plans and similar;
Product(s) and/or service(s) are clearly defined and match the whitepaper;
Information on the project funding and spending funds are provided in a transparent manner;
The token is meaningfully included in the product or service or project;
The revenue model is sustainable;
Competitive advantages are clearly defined and understandable and there is a general focus on problem-solving;
The project does not violate any laws and no investigative proceedings were initiated against the project or the team;
The project responds to additional legal and compliance-related questions received from Kriptomat.

4.1.2. Team

Team members are easily identifiable;
Team members (especially founders) are fully focused on this particular project;
Team members have proven experience, education, and knowledge in the field of the project,
The team is presented and the data is verifiable;
Virtual currency allocation to team members (usually after a virtual currency generation event) is compliant with best practices;
The leadership and team project organization are clearly defined, and obligations and the system are sufficiently developed;
The project team is scalable and indicated they can support the project in the long term and with a growing organization.

4.2. Virtual Currency Assessment Criteria

The virtual currency due diligence examination is divided into different virtual currency criteria segments. Based on the data obtained, together with corporate profile and team review outcomes a general overall risk assessment is given for each virtual currency based on internally determined risk classification. Kriptomat decides on whether to place the virtual currency on the exchange platform based on the determined risk classification. Optionally, risk mitigation measures might be defined. The mitigation measure that applies to each virtual currency is subject to ongoing monitoring.

The internal due diligence process is divided into the following criteria. Not all criteria are required to be met but serve as an orientation to determine the listing decision. The leading principle is customer focus, enabling them the most user-friendly experience and easy access to virtual currencies that are supported by reliable projects.

4.2.1. Compliance with Kriptomat values & general social imprint

There is a recognized overall added value to the domain industry, technology, and crypto community;
There is a match between Kriptomat’s mission and values and project’s mission and goals;
It is an innovative forward-thinking solution that users will benefit from;
The project clearly understands and commits to working for the benefit of its users and supports a healthy crypto environment;
The project aims to improve the current system using technologically sustainable solutions;
The project has proven deliverables with clear value for the users (eg. problem-solving solution, improvement, risk reduction, and similar) and is in accordance with the project’s whitepaper and business plan;
The overall crypto community is supportive and the communication between the project and the community is constructive and with a trustworthy spirit;
The project is a long-term project and takes into account possible market changes, market obstacles, and changes in trends and includes risk mitigation measures and worst-case scenario solution plans.

4.2.2. Virtual Currency Usability

The virtual currency usability is clearly defined, has actual value, and is sustainable and long-term supported;
The virtual currency enables virtual currency holders to use certain additional features, for example staking and similar;
It is expected to see an increased demand for virtual currency during the project roadmap implementation.

4.2.3. Technology

The technology of virtual currency is innovative and unique;
Whitepaper offers comprehensive information and explanation of the project idea with clear solutions to identified problems; project goals and objectives are clearly defined, understandable and doable;
Key past project milestones were properly achieved, they represent added value to the project, and any delays were reasoned and properly managed:
The code is open-source and peer audited based on best practice principles, maintained, and compliant with open source principles;
Vulnerabilities and bugs are managed and regularly fixed;
Development activity is public and legitimate;
There have been no major security incidents applicable to the code.

4.2.4. Security Prevention Measures and Tech Vulnerabilities Mitigation

The code has been inspected for possible vulnerability;
Best information security practice is being applied;
The project has implemented methods and procedures for identifying and responding to security vulnerabilities within the network;
The existence of a bug-bounty reward program;
Managed information security documentation.

4.2.5. Legal & Compliance

Virtual currency does not fall under the definition of security;
The project supports AML procedures and fulfills the relevant reporting requirements;
Blockchain monitoring is enabled and supported;
There is no detected connection with Dark Web activity or suspicious transactions;
The virtual currency does not relate to any industry for which a special license or authorization is required nor is expected to be;
The project has implemented good practice governance principles, is devoted to integrity, and is active in preventing unethical behavior;
The rights of a virtual currency holder, if existent, are clearly defined and do not represent rights indicating the virtual currency being secure.

4.2.6. Marketing & Community Support

The project team actively communicates with its supporter and clients, the communication is transparent, and questions are being answered in a timely manner and comprehensively;
There is general confidence in the project;
The project is internationally set and the virtual currency takes a wide part of global market capitalization;
The project positively responds to Kritpomat inquiries and is willing to participate in common promotional activities and PR events;
There are active channels of information (eg. Twitter, Blog, Linkedin. Github, Telegram …) that are properly managed.

4.2.7. Virtual Currency Demand

The project has a significant number of supporters/followers; there is generally positive feedback from the community.
The demand and the value of the virtual currency are very likely to increase long-term taking into account the roadmap progress;
Investors represent strong stakeholders who have experience in the industry or financial innovation, are reputable, and openly support the project.

5. Delisting Procedure

Kriptomat reserves the right to delist any virtual currency from the Kriptomat exchange platform at any time and for any reason without the obligation to state the reason for delisting.

Kriptomat carefully reviews the reasons for delisting and once delisting is confirmed, a delisting process is initiated.

In the following cases, Kriptomat will begin a delisting review process (examples are given by way of example only and not exhaustively):

Important security breach which compromises the virtual currency itself or its usability or/and project;
Indicated regulatory and compliance issues;
The virtual currency is no longer supported adequately by the virtual currency issuer, including in the case of liquidity of the legal entity of the virtual currency issuer and similar;
Using unfair business practices to manipulate the virtual currency price in the market;
Violation of the Whitepaper without explanations; non-delivery;
A decline in the reputation of the project and a decline in support from the community;
Initiation of an investigation against the virtual currency issuer or its team member(s) (e.g. for breaches of the law, tax evasion, non-compliance with AML requirements, etc.);
The project team is non-cooperative, is no longer communicating with the community, etc.;
The developers or team members are suspected of unethical or fraudulent activity;
Violation of a third party’s intellectual property rights;
It is established that the funds obtained were not used for the intended purpose;
Other detected risks related to the listing.

The delisting process starts with notifications to clients via email and knowledge base announcements. It is the client’s sole responsibility to regularly check updates on the virtual currency delisting. Kriptomat may disable virtual currency deposits during the notice period. The clients are required to withdraw the delisted virtual currency until the notice period expiry. If the client does not withdraw the delisted virtual currency until the notice period expiry, Kriptomat will have two options: i) deactivate the withdrawal option. Kriptomat will store the virtual currency for the client and a client may be charged a storage fee until the virtual currency is withdrawn, or ii) exchange delisted currency into USDT or some other stable virtual currency using the market exchange rate and debit the client’s account with USDT (or other stable virtual currency).

Kriptomat shall detail the fee and other non-withdrawal consequences of delisted virtual currency, or the fact of exchange into stable virtual currency in the delisting notification. The delisting process and withdrawal availability are impaired due to technical reasons on the side of virtual currency. Kriptomat retains all rights to define the delisting process withdrawal procedure and other consequences in accordance with the then-applicable circumstances.

6. Risk Warning and No Liability

In no event shall Kriptomat bear any responsibility for the placement of the virtual currency on its exchange platform, nor for the delisting.

The Due Diligence Audit does not provide any guarantees on the value or suitability of virtual currencies and/or projects. The Due Diligence Audit does not impose any liability on the Kriptomat and all listed virtual currencies are provided without warranty of any kind, either express or implied, and, in particular, without implied warranties of merchantability and fitness for a particular purpose and specifically for any profit or earnings. We do not guarantee that the virtual currency listed on our exchange platform will meet your needs or that access will not be interrupted. Placement of the virtual currency on the Kriptomat exchange platform does not constitute any warranty for Kriptomat.

Kriptomat shall bear no responsibility for delisting virtual currency.

To the extent permitted by Law, Kriptomat shall not be held liable for any damages, loss of profit, loss of revenue, loss of opportunity, loss of data, or indirect or consequential loss. Trading with virtual currencies involves a significant amount of risk. For more information about risks, please read our Terms of Service, Section Risk Warning.