Consolidated legal questions
Advances that are being made in the legal field are like pieces of a mosaic — while they are not particularly spectacular by themselves, together they form the complete picture. Ongoing legal matters are additionally an unappreciative topic to write about — they can typically be made public long after they have been resolved and even then, more often than not, parts have to be omitted. Nevertheless, a lot of ICONOMI legal advances have been made public through questions raised by the community. For an easier overview, we have consolidated them into one post.
Under what framework are your funds and ICONOMI regulated?
Grouping ICONOMI activity under established terms devalues the scope of how revolutionary ICONOMI’s activities actually are and creates unnecessary concerns around whether or not a part of legislation is directly applicable to us. What ICONOMI is creating is unique to the extent that it does not fit within traditional regulatory frameworks — it is a completely new asset class.
We are nevertheless devoted to respecting the rule of law and are making every decision in good faith. For example, we will be implementing all best AML and KYC practices we developed while operating Cashila, which include respecting EU KYC/AML legislation and adding our own mechanisms on top; we are proactively monitoring global regulatory developments and researching numerous jurisdictions; we are speaking with financial regulatory bodies in several jurisdictions; we are monitoring EU, USA and other legislation and mutatis mutandis implementing relevant institutes, preparing ICONOMI for when regulators intervene in the crypto world.
ICONOMI has already launched two ICONOMI Digital Assets Arrays, the ICONOMI.performance and the ICONOMI.index, and will soon launch the Digital Assets Management Platform. The way ICONOMI products function is inherently different from any instrument, financial or otherwise, known today. In order to make our vision easier to understand, we have decided to draw parallels between the old and the new worlds. While these comparisons have served as a teaching aid, ICONOMI is staying firmly in the new world.
As the service operator, Cashila carries no legal liability over the assets, trades, dividends or anything else on the platform. Is that correct?
You are correct. The service operator carries no legal liability over the assets, trades, dividends or anything else on the platform.
However, there are two important notes to be made here. First, “Cashila” is not the service operator of ICONOMI — ICONOMI Inc. is. Second, ICONOMI Inc. as the first service operator is implementing rigorous security protocols for developing a very robust system in order to provide an impeccable technical solution. Furthermore, in addition to the technical solutions, security protocols are being developed on a more conceptual level. For example: how the keys for the cold storage multi-sig are handled, how accesses are strictly generated and monitored,….
Once you start paying dividends, it will need to be clearer to shareholders what the legal boundaries are within which you operate, at least from the USA and EU regulatory points of view.
This established term was used to make the properties of the new asset class that is being established by ICONOMI easier to understand to a broader audience. For a more detailed description, please refer to the first part of this post.
What is/will be ICONOMI’s legal definition? From Legal — part 1: “ICONOMI will seek its own juridical personality…” Can you comment on any legal entity that you are using?
The service operator of ICONOMI is ICONOMI Inc.
Are ICONOMI services available to US citizens?
Due to the uncertain legal system, ICONOMI services are not available to citizens of USA at the moment. As soon as a clear decision is made, these restrictions will be removed.
How will you create transparency to show that you treat all investors at arms-length?
Once the array vectors are set, everything is done automatically according to the code. The code is the law in the case of ICONOMI. Operations are executed automatically in real time, with clear priorities set by the code and, most importantly, without human intervention. This is the best guarantee that all investors will be treated at “arms-length”.
How will you demonstrate that you respect the principle of “best execution”, where a fund provider must credibly demonstrate that the transaction was executed to the best conditions available in the market at any given time?
Generally speaking, lots of issues from the traditional world are solved by the nature of digital assets and the way they are traded.
Best execution can be translated into transparency in terms of decision-making, what is defined by the algorithms, while in this world everything is recorded and is traceable through APIs.
Will there be anti-fraud security measures in place or is this trust dependent on who your open fund manager is ?
Yes, several anti-fraud measures will be enforced. For example, the most obvious one will be the prevention of frontrunning. It will be a continuous learning process. We will begin with a small control group and gradually expand in accordance with the feedback received. Security measures will be the same for all the assets on ICONOMI.