March / April 2019 Update: Onboarding new Qualified Token Issuers
BetterTokens team is happy to announce the results of the Qualified status applications review for March and April. Cooperation of Waves and BetterTokens continues to bring more clarity and trust to the community.
During March and April, BetterTokens team received 7 applications requests for Qualified status.
Positive review results
The assessment of 7 projects has been finalized and 1 project out of 7 was awarded Qualified status.
We welcome a new member on board: the Incent Loyalty project, which will receive logo in Waves client and ticker on DEX, together with Qualified status.
The remaining 6 projects reviewed by BetterTokens were not able to demonstrate the required level of compliance with Tokenization Standards and obtain the Qualified status.
Upcoming reviews and Waves token rating system
We want to kindly remind the projects which have their tokens listed on DEX that in order to maintain current tickers, token issuers will have to go through BetterTokens review process. Projects that have not undergone BetterTokens review process will only be searchable on DEX by their token ID, starting on June 18, 2019.
As was announced previously the Waves team is making this process more accessible for projects by launching Waves Subsidy Programme and lowering the costs for the review for issuers down to 10 WCT. The Subsidy Programme will last until June 15, 2019.
We also wanted to draw the attention of the community that recently Waves launched a decentralised community-led token ratings system. We support this initiative and hope that in the future it might be integrated with Waves DEX in a similar way as BetterTokens is.
BetterTokens Application Guide
During the last months, we have received a lot of questions regarding application procedure especially concerning requested documents. We hope this article will help future applicants seeking to obtain Qualified Token Issuer status to easily go through our application procedure.
How to apply
There are two ways to apply for status. First one is through our website. After sending your application you will receive a letter confirming receipt of your application. In this letter, we also may ask for missing documents or information in the application form. Please note, that we will start a detailed review of the application after confirming with the applicant that we have a full set of documents and receipt of Non-refundable Membership Application Fee of 10 WCT (under the Waves Subsidy Programme until June 15, 2019).
If you have any problems with the application through the website you may send your queries to firstname.lastname@example.org. Also, you can apply through email@example.com by filling the application form and sending the documents. As it is stated above you will receive a confirmation letter from our side.
We do not process the reviews without proper applications. If the issuer wants to determine its status application procedure is obligatory. Sending the website address of the issuer and asking us about the status is not considered as the right form of application.
We ask the project to provide consistent and accurate information from the very beginning to avoid any inconsistencies and misleading information that might affect the final decision on the status.
We also ask the projects to be transparent and answer our based on the real circumstances of the project.
As a general rule, we expect applicants to send us all of the documents included in the list. If the applicant doesn’t have any of the documents specified in the list it may attach the file (list of the submitted documents) with the indication of attached documents and documents that are missing with explanation why these documents are absent (for example:  Legal opinion (if obtained) — not obtained due to the high quality of the issuer’s in-house lawyers).
We also recommend naming the documents attached to the application in accordance with the list (sometimes it is quite unclear how the documents correspond to the requirements).
Below we describe particular points of the list of documents.
 Logo requested for Waves client (svg format only, 20kB)
This point says for itself, however almost every applicant fails to send the correct logo from the first try. The format and size requirements are crucial for us. JPG, PNG or logo in PDF files are not acceptable. Our experts will ask you to send logo again if it is not of the required format. Please also keep in mind the size limitations. Even if the logo’s size is 21 kB we could not accept it due to the technical reasons.
 Legal information concerning tokenisation project (Certificate of Incorporation; Articles; Charter)
It is common business practice to incorporate legal entity before starting the tokenization. This entity will be treated as an issuer of tokens and will be bound by obligations (if any) connected with tokens. Incorporation of the legal entity is proved by the certificate of incorporation (or by another document of similar nature, e.g. extract from the commercial registrar / tax registration certificate, etc. depending on the jurisdiction of incorporation).
Articles of Association (or Memorandum) / Charter of Incorporation are internal documents of the legal entity defining its purpose and business objectives.
If there is no legal entity established, the applicant may provide information about the individual founders of the project with confirmation (might be in email or in the document attached to the application) that these individuals are acting as issuers of the token. We do not ask you to provide IDs or other documents of these persons.
 White Paper
Please refer to one of our previous articles dedicated among other issues to the content of the White Paper.
 Detailed technical specifications for the project
We have faced projects stating that they use new revolutionary technology. However, in the documents provided to the investors, is used but in documents, only a very broad and high-level descriptions of these technologies are included. If the project/product is of tech nature (involves the use of new technologies or implements a new way of using for known technologies) we expect the token issuer yo provide a clear and comprehensive description of how technology is working and how it might be used, what are the specific changes or improvements.
The technical description might be given in the White Paper. If this is the case, we expect applicants to send us a separate part from the White Paper or indicate the part of the White Paper covering technical specification of the project/product.
 Token sale agreement (or equivalent) / Private sale terms (if applicable) / Bounty programme terms (if applicable)
- Token sale agreement (or equivalent, for example, SAFT). As a rule, contains a description of the rights and obligations of the issuer, as well as disclaimers and covenants. Token sale agreement formalizes contractual terms of purchase of token by the investor.
- Private sale terms (if applicable). It depends on whether the project conducts a private sale or not. If the applicant starts with the ICO then private sale terms are not applicable but if the tokenization initially accompanied with a private sale with a particular set of terms (different from the terms offered to investors under the ICO event) this document usually will be drafted by the projects.
- Bounty programme (if applicable). This document usually contains a set of bounties’ obligations and terms of the reward payments by the issuer. If there is no bounty campaign then this document is not applicable.
 Website and Marketing materials
We would like to draw the attention of the projects that the website should be deployed with Hyper Text Transfer Protocol Secure (HTTPS).
 AML / KYC Policy or measures description
This document covers KYC procedures implemented by the project during the token sale. If there is no formalized document describing the procedure and procedure is implemented through the website we recommend the applicants to provide the screenshots of the requirements applicable to the persons/entities purchasing the tokens.
If for KYC procedures the applicant engages with a third-party service provider, we recommend to indicate in the the application relevant information about the service provider and attach the respective agreement covering the provision of mentioned services to the applicant (sensible and confidential data might be erased, we only need to confirm the scope of the services and counterparty information).
And as we mentioned before, the projects conducting ICOs through DEX or other decentralized exchanges should be aware that obligation to conduct AML/KYC remains with the issuers, decentralized exchanges are not liable for projects’ investor identification as there is no central intermediary between the projects and the investors.
 Internal risk management policy or measures description
Tokenization and ICOs are connected with the risks. For example, cybersecurity risks;breach of personal data of the tokens holders stored by the issuers; regulatory and tax risks, etc. Risk management policy usually describes the measures to prevent, minimize or mitigate the consequences of the risk event.
 List of key relevant markets and investors targeted by tokenisation project
Tokenisation and ICOs have their target consumer or investor audience, target markets, etc. The form of provision of this information remains at the discretion of the applicant (it might be a map with the countries or written explanation).
 Results of independent security audit (if conducted) / internal code review (if conducted)
Usually, third-party service provider reviews the code of smart contract used during the token sale and/or used by the issuer for business purposes. It is not connected with the features of Waves or other platforms, this kind of audits are used to demonstrate that implemented technical solutions or smart contracts are secure and reliable.
 Legal opinion (if obtained)
This is a legal memorandum provided by the law firm or individual lawyer describing the legal nature of the token, its characteristics, rights, and obligations attached to the token, legal risks connected with legislative compliance (we believe this might be applicable even if the legislation in particular jurisdiction is absent), classification of a token as a security or utility, etc.
 Any other documents considered by the applicant as having crucial importance for the application process
The applicant may provide any additional documents that are important for the understanding of the project and its product.
We hope that applicants will find these guidelines comprehensive and useful. We are open for discussion and ready to answer additional questions regarding the application procedure, please do not hesitate to contact us at firstname.lastname@example.org.