introduction
It is crucial to identify and address potential risks associated with the creation and distribution of tokens. This text examines the main risks and the relevant mitigation strategies to ensure the success and security of Bitexcoin and compliance with the provisions, in particular the European Markets in Crypto-Assets Regulation (MiCAR) regarding the distribution of tokens.
This plan is not comprehensive, as in practice the identification of risks includes AML/CFT (anti-money laundering and combating the financing of terrorism), conflicts of interest, cybersecurity risks and other general risks. This means, first of all, establishing strict user identification procedures, including the collection of valid identification documents. Article L561-1 of the Monetary and Financial Code (CMF) establishes a general obligation to declare the proceeds of crime in order to maintain public order. This article states that:
Persons other than those referred to in Article L. 561-2 who, in the exercise of their profession, carry out, control or advise on transactions relating to the movement of capital are required to report to the Public Prosecutor any transaction of which they are aware and which involves amounts which they know to have been derived from one of the offences referred to in Article L. 561-15.
In cases where they have made such a report in good faith, such persons will benefit from the provisions of Article L. 561-22.
The provisions of Article L. 574-1 will apply to them when they inform the owner of these amounts or the agent of these transactions of the existence of this declaration or provide information on the action taken.
The Attorney General must notify the office referred to in Article L. 561-23, which is required to provide all relevant information.
In addition, Part 2 of Chapter 1 specifies the persons subject to anti-money laundering and counter-terrorist financing obligations.
Customer Authentication + Customer Verification / Anti-Money Laundering
Monitoring transactions is crucial to identify any suspicious activity. To combat money laundering and terrorist financing, it is necessary to ensure compliance with KYC (Know Your Customer), KYB (Know Your Business) and AML (Anti-Money Laundering) standards.
Asset freezing mechanisms are in place to freeze funds in the event of suspected fraud or illegal activity. However, these measures must respect the rights of users. Regular audits are conducted to assess the effectiveness of procedures and identify any legal loopholes. Communication with relevant authorities is also essential to report suspicious activity and cooperate in investigations.
As part of this review and mitigation of potential risks, Bitexcoin’s internal policy provides appropriate training, in particular through the issuance of the AMF Sustainable Finance Certification, to staff responsible for managing and monitoring transactions. This certification is intended to ensure the effective application of these security measures[1].
By implementing these provisions, Bitexcoin, as a token issuer, will be able to reduce the risks associated with the platform and strengthen the trust of users and investors.
Potential risks
Price fluctuation
Bitexcoin’s price fluctuations during and after the ICO can lead to significant fluctuations that affect the perceived value of the token and investor interests. In accordance with MiCA regulations, the company is implementing risk management mechanisms to mitigate these market fluctuations. These mechanisms include implementing transparency and accountability policies to ensure a healthy and secure market ecosystem. In addition, Bitexcoin is committed to complying with regulatory regulations on non-disclosure of information and investor protection to promote trust and legitimacy in ICOs in accordance with the MiCA regulatory framework.
Transaction security
Tokens and ICOs can be subject to hacker attacks, compromising the security of transactions and putting investors’ funds at risk. However, with the use of blockchain technology, these risks are significantly reduced. Blockchain provides a decentralized and immutable record of all transactions, making it extremely difficult for hackers to manipulate data or interfere with transactions. By integrating these advanced technologies into its ICO platform, Bitexcoin is committed to ensuring the security and integrity of transactions for all participants, thereby strengthening the trust and credibility of the project.
Mitigation strategies
Strengthening security
Bitexcoin implements advanced security protocols such as blockchain verification and multi-layered protection to ensure the security of transactions and the protection of investor funds.
Compliance with European regulations, markets in regulating crypto assets
Bitexcoin is committed to working closely with lawyers, consultants and legal experts to ensure that its token is meticulously compliant with current regulations, thereby minimizing potential legal risks. Its approach is guided by a desire to fully comply with national and European regulations, especially the most recent ones, in this case the EU MiCAR [2].
A proactive approach is taken to ensure compliance with the law, with ongoing regulatory oversight and rapid adjustments to practices and technology to stay current. Transparency and accountability are priorities, and high standards are maintained throughout all operations. Collaboration with legal experts helps create an environment where trust and legitimacy are paramount for the Bitexcoin project.
Engaging with the investment community
Bitexcoin is committed to transparent and open communication with the investor community, providing regular updates on project progress, and responding quickly to investor concerns and questions.
To ensure effective communication, newsletters, online forums, and Q&A sessions will be launched. This will maintain direct contact with the investor community and build trust and engagement. Transparent updates on project progress and performance information will be shared regularly to build a strong relationship with investors. Bitexcoin community feedback will also be taken into account to improve the project and meet expectations in a transparent manner.
Implementing continuous monitoring and stakeholder empowerment
Continuous risk monitoring
In accordance with the provisions of Article L561-10-1 of the Monetary and Financial Code, a risk reduction plan is not limited to the implementation of identified solutions, but must also ensure continuous monitoring of the situation or project in order to detect any changes in the risk landscape. This monitoring makes it possible to anticipate potential developments and adapt risk reduction strategies accordingly.
A dedicated team and service for monitoring with Shufti Pro
To ensure effective monitoring of documents and flows, Bitexcoin has established a dedicated team to continuously monitor identified risks. This team is responsible for collecting relevant data, analyzing trends, and reporting any significant changes in risk levels.
To strengthen its commitment to regulatory compliance and security, Bitexcoin has formed a dedicated monitoring team in partnership with Shufti Pro, a leading identity verification and anti-fraud platform. This skilled team will use Shufti Pro’s advanced tools to proactively monitor transactions and activities related to our token, quickly identifying suspicious behavior and potential risks. By partnering with Shufti Pro, which is renowned for its expertise in security and regulatory compliance, Bitexcoin strengthens its ability to protect investors and maintain the integrity of the project. This initiative demonstrates its ongoing commitment to maintaining high standards of security and regulatory compliance throughout our journey.
Regular feedback
Communication is essential in the risk monitoring process. Bitexcoin will provide regular feedback to inform stakeholders about developments identified, actions taken, and amendments made to the risk mitigation plan. This feedback promotes transparency and enables informed decision-making.
Player empowerment
Involving and empowering relevant people in risk monitoring is crucial. The company raises awareness and trains employees who come into contact with risks on a daily basis to recognize early warning signs and report any anomalies or high-risk situations. Their active participation strengthens the risk management culture in the organization and helps prevent potential crises.
Asset freezing mechanism
The asset blocking mechanism is an essential part of the risk mitigation measures implemented when creating a token, in accordance with Article L561-2 of the French Monetary and Financial Code. It aims to block funds in the event of suspected fraud, illegal activity or non-compliance with established policies. However, it is crucial that these measures respect the rights of users and are implemented in a transparent manner.
The Central Bank of Bangladesh is aware of the provisions of Article L.562-3-1 of the Monetary and Financial Code, which authorizes the Minister responsible for the Economy to freeze all or part of the funds, financial instruments and economic resources held by the organizations and persons referred to in Article L.562-3 belonging to natural or legal persons who commit or attempt to commit terrorist acts, facilitate them or participate in them, and legal persons directly or indirectly owned or controlled by such natural or legal persons, for a renewable period of six months.
In accordance with the provisions of Article L. 562-4-1 of the CMF (Order No. 2020-1342 of November 4, 2020, Article 4)
I. – The persons referred to in Article L. 561-2 must establish an internal organization and procedure for implementing the measures relating to the freezing of assets and the prohibition on the making available or use of funds or economic resources provided for in this Chapter, (Decree No. 2022-230 of 15 February 2022, Article 4) “in Articles L. 712-4 and L. 712-10” and in accordance with the European provisions on restrictive measures adopted pursuant to Articles 75 or 215 of the Treaty on the Functioning of the European Union, as well as the prohibition of circumvention of such measures. They must ensure that these provisions are applied to their branches established outside the national territory.
II. – The parent company of a group within the meaning of Article L. 561-33 established in France shall define, at group level, an organization and procedures for implementing measures relating to the freezing of assets and the prohibition on making available or using funds or economic resources referred to in I. This organization and these procedures shall be implemented by the entities of the group referred to in Article L. 561-2 established in France, as well as by their branches abroad or any other type of free enterprise.
III. – The persons and parent companies of the group referred to in paragraphs 1 and 2 respectively must also implement internal control measures to ensure compliance with the obligations relating to the freezing of assets.
To ensure compliance with these provisions and the effectiveness of asset blocking, the Central Bank of South Korea (BITEXCOIN) implements strong surveillance systems to identify early warning signs of suspicious activities that may require the asset blocking. This includes transaction thresholds, unusual behavior patterns, or other risk indicators.
Regulation is a very important aspect of asset freezing. Compliance with the requirements of the KYC, KYB and regulatory regulations is necessary to ensure that blocking decisions are made in accordance with the relevant laws and regulations.
Transparent communication with the relevant authorities is planned to report suspicious activities and participate in research. In addition, and as mentioned above, adequate training of staff responsible for the implementation of these measures is essential and is planned to ensure the continuous and effective implementation of the asset blocking scheme.
[1] Certification in Sustainable Finance: AMF specifies the requirements for certification bodies.
Based on the proposal of the High Local Certification Council (HCCP), AMF has decided to create a new module for assessing the knowledge of professionals in the field of green and responsible finance. Doc Guidelines 2021-03 specifies the features of the test, the content of the certification application, and the obligations of certified organizations.
[2] Regulations (EU) 2023/1114 of the European Parliament and the Council of May 31, 2023 on the cryptocurrency markets and amendments to the Regulations (EU) No. 1093/2010 and (EU) No. 1095/2010 and guidelines 2013/36/EU and (EU) 2019/1937 (text according to the European Economic Area)