Disclosure to Clients
42. As part of establishing a relationship with a
(a) a crypto-asset is not a legal tender and is not backed by the government;
(b) legislative and regulatory changes or actions at national level or international level may adversely affect the use, transfer, exchange, and value of crypto-assets ;
(c) transactions in crypto-assets may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;
(d) some crypto-asset transactions may be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the client initiates the transaction;
(e) the value of crypto-assets may be derived from the continued willingness of market participants to exchange fiat currency for crypto-asset , which may result in the potential for permanent and total loss of value of a particular crypto-asset should the market for that crypto-asset disappear;
(f) the volatility and unpredictability of the price of crypto-assets relative to fiat currency may result in significant loss over a short period of time;
(g) cybersecurity risks associated with crypto-assets including the risk of partial or full loss of crypto-assets in the event of a cyber-attack, and measures that have been put in place to mitigate the cyber security risks;
(h) the nature of crypto-assets means that any technological difficulties experienced by the licensee may prevent the access or use of a client’s crypto-assets ;
(i) any investor protection mechanism;
(j) the rights and entitlements of a client when events such as, but not limited to, forks and airdrops occur;
(k) how they execute and route client’s order and source liquidity (e.g. whether they pass or route orders to an exchange to execute). Where the licensee routes client orders to one or more crypto-asset exchanges for execution, it must disclose details of all the crypto-asset exchanges; and
(l) how it determines the prices of the crypto-assets it quotes to clients.
Added: January 2024