Legal & Compliance

The legal and compliance framework of the CVEX reflects a commitment to regulatory adherence while embracing decentralised governance.

Regulatory Status

1. CVEX Protocol: Initially developed by Tacans, a software entity based in Switzerland, the CVEX Protocol will be governed by a dedicated AG (Aktiengesellschaft) in Switzerland once published. This AG will in turn be controlled by a DAO. The DAO is responsible for the appointment of qualified directors who will make legally consequential decisions required by authorities. This means that although the DAO holds the ultimate authority, qualified human oversight exists to meet future regulatory requirements. As many proposals as possible will be delegated to the DAO, but the role of directors acts as a filter for fiduciary duties.

2. Platform Businesses: Each instance of the Platform will be established by a separate entity or group of entities and will manage all Oracle data and risk assessments. The first Platform Operating this will be the CVEX platform which is independent of the Protocol, its Swiss AG and the DAO, it falls outside the scope of Swiss regulations, and the CVEX Platform will not be located in Switzerland. It is funded through a small percentage of transaction fees and is not part of the token model. It purely publishes data and will not be regulated. It has no direct relationships with clients. This first version will act as a template for other platforms to establish themselves.

3. Front-end Business: A third, also independent, entity will handle the front end of the platform and will earn a share of the transaction fees. It will operate outside of Switzerland and will not be under the control of either the AG or the DAO, it will not be regulated. It will not be related to the Platform. The first version of this will be available for builders and operators to grow and specialise.

Business Model

1. CVEX Protocol: Developed by Tacans but governed by a Swiss AG, which is further controlled by a DAO. The DAO has the power to appoint qualified directors to the AG, ensuring legal compliance and oversight. The Protocol's business is to provide a secure environment for the creation of decentralised futures and options platforms.

2. Platform Business: Handles Oracle data and risk management and operates outside of Switzerland, it earns a portion of the fees. It’s independent of Tacans, the AG, and the DAO.

3. Front-end: Another independent entity that deals with user interaction, funded by a portion of the transaction fee.

Governance

• DAO: Holds ultimate authority over and controls the Swiss AG that oversees the CVEX Protocol. The DAO is responsible for appointing qualified directors for the AG to ensure that the protocol meets legal and regulatory standards. We currently don't believe there are any regulatory standards to comply with based on legal advice, as the protocol does not itself match the transactions, merely providing technology to users to create matches, but we are aware this can be changed. Having qualified directors will enable us to be responsive to changes in the regulatory environment.

• Qualified Directors: Appointed by the DAO to the AG, these individuals make legally binding decisions concerning the protocol that are required by Swiss and potentially other jurisdictions' authorities.

• Decision making: Where possible changes to the protocol, such as extensions to function or changes to existing function will be controlled and offered to vote at the DAO.

In summary, the DAO holds overarching control of the protocol, but human oversight in the form of qualified directors ensures that all regulatory obligations are met.

Future Regulatory Status – founding team comment

We can't speculate on the direction that the regulators will take with respect to this market, only that regulation of new areas seems to follow success. We are not against regulation, though we don't believe that any single component currently meets the regulatory burden we are aware that rules change. This comes from formal advice that we will retest from time to time.

From this perspective we are fully supportive of the spirit of the regulation, that the creation of a safe, well-ordered and and well governed environment is good for all of us. We therefore follow a lot of the principles in the construction of this environment, such as making sure that the risk parameters and risk approach are inline with the international standards. That no one entity from our projects has control to abuse their position. Along with this collateral pools are segmented between platforms, custody of assets is on-chain and controlled only by the protocol and the user. A default fund will operate to insure assets, and all risk parameters will be externally verifiable.

We want this protocol to be used by many entities to build their own market, not just our own platform, to solve the problems for deprived communities in having a cost effective way to hedge their exposure to all manner of instruments.

This is a decentralised protocol so currently there are no-user engagement barriers, however this is explicitly not a coin mixer, and all transactions can be traced, it cannot be used to invisibly launder the proceeds without that continuing to be traceable via platforms such as Chainalysis. If required by a regulator in the future the collateral pool can be converted into a walled garden, where wallets with above a certain collateral amount require KYC. There is not a strong self sovereign ID for this purpose today, but we can see the value that one might bring to a decentralised protocol.

We will actively engage with any regulators that approach us.

We are explicitly not marketing this product or engaging with KOLs that are USD based. We look to not create a nexus for regulatory requirements in the US.