Firms

Conditions

Disclosure of testing status
1. The Licensee must disclose prominently on its website, in any written communication that it provides to a Client or potential Client, and in any form of electronic media that it makes accessible to a Client or potential Client, that:
(a) its Licence is a restricted “Innovation Testing Licence” and it is restricted under the Licence to testing its Service; and
(b) due to the limited nature of its Licence, normal requirements and Client protections may not apply and Clients may have limited rights if they suffer loss as a result of taking part in testing.
Disclosure relating to the legal nature of tokens
2. The Licensee must disclose to potential investors the following information relating to the tokens that are issued:
(a) details of the rights and obligations conferred by the token;
(b) the person by or against whom the rights conferred by the token can be legally enforced;
(c) the jurisdiction in which the person in (b) is resident or incorporated;
(d) whether the rights and obligations arise under a contract, trust, law (such as companies law) or other instrument and details of the contract, trust, law or instrument;
(e) the rights (if any) token holders will have in relation to any underlying property owned or held by the recipient of the proceeds of the token issuance;
(f) risks relating to the use of tokens, including any risk relating to the enforceability of the rights and obligations conferred by the token; and
(g) if the token relates to a share and the share is not registered in the name of the token holder, the legal nature of the token, how it differs from a share and the category of Security it constitutes under GEN Rule A2.1.2, for example, whether it is a Certificate or a Unit.
3. The above disclosures relating to the legal nature of tokens must be communicated to potential investors by the Licensee clearly in writing before the Licensee arranges a deal or provides advice relating to the token.
Regulatory Test Plan
4. The Licensee must ensure that it complies with its programme for testing its Service as set out in its Regulatory Test Plan.
Exit Strategy
5. No later than one month after the end of the Testing Period, the Licensee must submit to the DFSA either:
(a) a duly completed application to remove the restrictions on its Licence, that includes all information necessary to demonstrate to the DFSA that it can meet the requirements to hold an unrestricted Licence; or
(b) a request in writing to withdraw its Licence.
6. If the Licensee applies to the DFSA to remove the restrictions on its Licence and the DFSA refuses to remove the restrictions, the Licensee must no later than one month after it is notified by the DFSA of the refusal, submit a request in writing to the DFSA to withdraw its Licence.
Exit Plan
7. The Licensee must ensure that an Exit Plan, satisfactory to the DFSA, is finalised prior to the first token issuance.
Legal structure
8. The Licensee must provide the legal structure of both token issuances to the DFSA with analysis, satisfactory to the DFSA, setting out how each token issuance qualifies as an investment under the DFSA Rules.
External Audit
9. The Licensee must undertake an appropriate external audit of the smart contract prior to the first token issuance and provide the DFSA with the findings.