Introduction – the Goal
The Blockchain Association was created by The Financial Commission with the goal of advancing self-regulatory efforts for the digital currency trading community by uniting cryptocurrency exchanges and financial firms transacting on blockchain that are committed to upholding the highest standards of commercial honor and best business practices.
Firms joining the Blockchain Association provide their current and future customers the opportunity to have any issues that arise from transacting in digital currencies to be examined and reviewed by the Blockchain Expert Committee, which consists of a panel Fintech experts from foreign exchange and cryptocurrency markets. By doing so, association members contribute to a new self-regulatory process to resolve issues with their customers that have never previously been offered by regulators or other self-regulatory organizations.
In joining our professional community companies also have the unique opportunity to consult with industry experts and fellow association members on how to resolve issues and adopt best practices to sustain growth during the current rapid development of blockchain technology and digital currency trading.
The Blockchain Association will be open to the financial services providers and fintech firms, who satisfy the following criteria:
- shall be providing financial services which are based on the blockchain technology;
- shall comply with applicable laws and regulations in the jurisdiction of its registration and all jurisdictions where it conducts business, including, if required under applicable law, obtain and maintain the necessary licenses and permits;
- submit materials (e.g., by way of an explanatory note or a slide-presentation) describing the potential member’s commitment to improving the financial system and making it safe and user-friendly for the customers;
- provide true, complete and accurate information about the corporate structure and the ultimate beneficial owners of the company; and
- if approved, enter into the membership agreement and pay the annual fees.
The association members will pay annual fees of EUR 10,000. The fee is non-refundable and not subject to pro-ration if a member withdraws prior to the expiration of the annual membership term.
Blockchain Expert Committee (BEC)
The Blockchain Association is open for any suggestions from the members on the composition and key requirements of for the people who would be offered to join the BEC. Members of the association may nominate their individual experts to be included in the BEC to help review dispute cases and foster the development of best practices for self-regulating the digital currency (crypto industry). However, The Financial Commission reserves its final right whether to accept such nominations.
The association members will agree that The Financial Commission will have authority to provide an alternative dispute resolution forum for the customers of its members on cases involving digital currencies. If a case is filed with the Financial Commission which involves a digital currency dispute, the shall comply with the Financial Commission’s information requests and will be expected to participate in the dispute resolution process. The members shall comply with The Financial Commission’s Rules as published on The Financial Commission’s website from time to time.
The BEC shall act as an advisory body to The Financial Commission on digital currency cases. In addition, the BEC shall have an authority to independently review any customer complaints against a member and issue its recommendations. Such BEC recommendations will not have a binding effect either on the association member or the customers. BEC’s review authority is intended to provide examples of common issues in the digital currency/blockchain marketplace to help the association members formulate strategies on fixing such issues or avoiding them in the first place.
The Blockchain Association will host regular discussions and scheduled events for its members to share and contribute information to help improve business practices, tackle common industry problems and provide feedback on potential marketplace risks for the association members. All members will be expected to participate in such discussions and events.
Code of Conduct
The members will be expected to adhere to the following code of conduct principles:
- commit to operating honestly and responsibly in their relationships with consumers, including the proactive disclosure of clear information on pricing, leverage and fees and any associated risks;
- communications with customers and prospective customers (including marketing and promotional material) must be fair, clear and not misleading – enabling informed decisions to be made, as required;
- publicly available platform information must include details of:
- the full complaints procedure;
- the senior management team;
- the legal form of the business, the registered office address and date of launch;
- arrangements in case of business failure; and
- any material changes to the business which impacts customers;
- commit to undertaking appropriateness checks to ensure that investors are fit and proper to undertake transactions;
- commit to ensuring the proactive management of IT infrastructure to prevent leakage, loss and damage of personal information, in accordance with data protection regulations;
- commit to segregating fiat customer from company funds, and to ensuring customer funds are payable upon an insolvency event;
- for customer funds not being used for trading, liquidity & transfer purposes 90%+ of private keys should be held in cold storage;
- where a customer is found to be acting in an illegal manner, members commit to working with the appropriate authorities to prevent, detect and deter such occurrences;
- provide for an internal dispute resolution process for their customers to ensure a quick and easy resolution to any issues that may arise in the course of business;
- in line with anti-money laundering regulations, commit to undertaking due diligence checks on platform users to protect against illegal activity, including the financing of terrorism; and
- to tackle market abuse, commit to halting trading if suspicious activity is identified; to suspend and close any accounts engaging in such activity; and to notify the relevant authorities.