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6. BD Minters and Minters

6.1. Contact Information of Currently Permissioned Minters

6.2. Eligibility Criteria for Permissioned Minters

BD Minters and Minters shall be set up and operated in compliance with the requirements and criteria described in the Adopted Guidance. In case the setup and operations of the BD Minter and/or Minter requires decisions on matters that are not covered in the Adopted Guidance, the stability, safety and availability of M shall be the sole guiding principle for such decisions.

Per one Minter entity, the current version of the Adopted Guidance allows only one Minter Address to be permissioned.

Minters shall be set up in such a way which maximizes insolvency remoteness. They shall not be allowed to conduct any other business but interact with the Protocol for the management of M. This excludes, for example, in particular any commercial and employment agreements. In principle, the Minter entity shall be fully owned or at least controlled by a BD Minter. Alternatively, a Minter shall be orphaned and operated by the BD Minter. Permissioned Minters are expected to fulfill the following criteria:

  • Be a duly incorporated entity, not in a High-Risk Jurisdiction.
  • Have the technical ability to interact with the Protocol.
  • Be able to provide signed Minter-SPV Operator agreement with a permissioned SPV Operator.
  • Have all licenses and permissions required in their jurisdiction.
  • Have reasonably strong insolvency remoteness.
  • Be orphaned, solely owned, or controlled by the BD Minter.
  • Be affiliated to a BD Minter that is not incorporated in a High-Risk Jurisdiction.
  • Have established practices that are consistent with internationally accepted standards (such as the Financial Action Task Force (FATF) Recommendations) in regards to policies and procedures reasonably designed to prevent the Minter from facilitating money laundering and terrorist financing including an established KYC program and identifying and reporting suspicious activity, as appropriate.
  • Have established policies and procedures designed to prevent the Minter through the BD Minter from processing transactions that violate OFAC or EU sanctions, including by implementing transaction screening procedures to identify OFAC listed Specially Designated Nationals (SDNs) and persons normally resident in jurisdictions subject to comprehensive sanctions.

Minters should not enter into any other agreements except the following:

  • Agreements necessary to purchase Notes issued by the SPV.
  • Agreements with its BD Minter for the provision of services required to operate the business of the Minter.
  • Funding agreements with its BD Minter for the sole purpose of financing collateral purchases.
  • Minter-Validator Agreement(s) and Minter-SPV Operator Agreement(s).
  • Agreements reasonably necessary for compliance with regulatory obligations including anti-money laundering and sanctions checks (can be fulfilled by the BD Minter on behalf and for the Minter).

Every agreement that the Minter enters into shall be co-signed by the BD Minter and shall contain a clause whereby the BD Minter absorbs any and all financial liabilities arising from such agreements.

6.3. Obligations of Minters

The provisioning of sufficient collateral for its Owed M is deemed to be in the responsibility of the Minter, irrespective whether such Owed M was caused by the minting of M, applied Minter Rate or Penalties. It is the Minter’s obligation to at all times provide enough capital to the SPV so that the SPV Operator can purchase sufficient Eligible Collateral.

Minter’s need to demonstrate that they provided a sufficient amount of Eligible Collateral via calling the updateCollateral() function at least once per every Update Collateral Interval. If they fail to do so a Penalty will be added to the Owed M for the time they are not in compliance with Protocol rules.

Minters need to at all times have a valid Minter-SPV Operator Agreement which meets the criteria set in place with an SPV Operator that is and remains for the time of service listed in Contact Information of Currently Approved SPV Operators.

Before submitting the first and any consecutive mint proposals, the Minter has to make an Administrative Buffer available to the SPV Operator. The payment of the Administrative Buffer can be made in Deposit Equivalents. If the SPV Operator is making use of the Administrative Buffer or parts thereof in accordance with the criteria set out in the Adopted Guidance, the Minter shall replenish the Administrative Buffer so that it meets or exceeds the defined amount for the Administrative Buffer before submitting any further mint proposal.

In the interest of the stability of M and the ecosystem, a BD Minter should provide assurance (solely) to their direct institutional counterparties that it will buy back M at par value (minus any applicable fees), within the scale and time frame appropriate given its business operating conditions.

6.4. BD Minter and Minter Compliance Requirements

Each Minter and its affiliates, such as the BD Minter, must have written policies, procedures, and internal controls designed to ensure compliance with the applicable laws within the jurisdiction in which they operate. Additionally, Minters need to have anti-money laundering procedures that are reasonably designed to prevent the Minter from facilitating money laundering and terrorist financing including know-your-customer policies, maintaining highly useful records for law enforcement and regulators and identifying and reporting suspicious activity, as appropriate. These controls must be designed to comply with the obligations of the Minter’s jurisdiction of incorporation or with the international standards recommended by the Financial Action Task Force, as specified below. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

Minters need to maintain anti-money laundering and counter terrorist financing (AML/CFT) programs that are reasonably designed to manage and mitigate the Minter’s risks related to money laundering and terrorist financing. The nature and extent of the AML/CFT program depends upon a number of factors, including the nature, scale and complexity of the Minter’s operations, the diversity of its operations, including geographical diversity, its customer base, product and activity profile, and the degree of risk associated with each area of its operations, among other factors. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

As part of its AML/CFT program, Minters need to obtain and verify the customer identification information as required by the laws of the jurisdiction within which it operates. Minters must also implement policies and procedures to collect additional information to verify the customer’s identity at the beginning of the customer relationship to demonstrate that the Minter can form a reasonable belief of the identity of its customer. Minters must also implement policies and procedures to conduct due diligence about its customer sufficient for the Minter to establish a customer’s risk profile and conduct ongoing monitoring. Such additional, non-core identity information, could include, for example an IP address with an associated time stamp; geo-location data; device identifiers; digital asset wallet addresses; and transaction hashes. Minters may simplify the extent of these due diligence measures where the risk associated with the customer relationship or activities is lower. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

Minters need to implement policies and procedures that assist with identifying customers’ unusual or suspicious movements of funds or transactions indicative of potential involvement in illicit activity. These policies and procedures should ensure that the Minter can timely identify, investigate, and report customers’ unusual or suspicious activity in compliance with the requirements and timeframes imposed by the jurisdictions within which they operate. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

Minters need to designate a person with the responsibility to ensure compliance with the AML/CFT program and oversee day-to-day operations concerning such compliance. This person must be empowered with sufficient authority and autonomy to implement the Minter’s AML/CFT program including access to sufficient resources as needed to mitigate the Minter’s risks of money laundering and terrorist financing. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

Minters need to develop procedures to test the effectiveness of the AML/CFT program commensurate with the Minter’s level of AML risk exposure. The party designated to test the AML/CFT program must be independent, qualified, unbiased and free from any conflicting business interests that may influence the outcome of the compliance program test. The Minter’s policies should include provisions for tracking and remediating weaknesses identified as part of these independent reviews. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

BD Minters need to implement a training program to ensure that all employees at the BD Minter, or independent contractors or third party service providers involved in the BD Minter’s and/or Minter’s operations, understand their obligations under the AML/CFT program. Such training should include senior management and the board of directors or other similar governing bodies of the BD Minter and Minter. The training program should be designed to provide appropriately detailed information to employees based on their level of responsibility regarding the AML/CFT program.

BD Minters and Minters need to, at all times, comply with all economic or financial sanctions or trade embargoes imposed, administered or enforced by the United States (including those administered by OFAC and the U.S. Department of State), the EU, and any other government authority with jurisdiction over the BD Minter and Minter. The Minter needs to maintain effective measures to ensure compliance with, and awareness of, its sanctions-related obligations. This includes implementing measures to conduct appropriate due diligence on customers’ underlying transactions and the parties involved by screening such parties against OFAC’s SDN list and EU sanctions and monitoring virtual asset wallet addresses against such lists. Additionally, these measures will monitor the jurisdictions within which its customers are domiciled to prevent the Minter from facilitating transactions on behalf of persons residing in any country, region or territory, or government thereof, that is the subject or target of comprehensive sanctions. These obligations can be fulfilled by the BD Minter on behalf and for the Minter.

6.5. Guidelines for Submission of Permissioning Requests

An application for the permissioning as a Minter requires the whitelisting of the applicant’s public key on the list of permissioned Minters.

As the most central actor in the ecosystem, Minters shall have a thorough understanding of the Adopted Guidance and all the ways it impacts their business. It is expected that the approval of Minters by Governance shall involve an in-depth collaboration with governors so they reach a good level of understanding of the applicant’s abilities.

Before submitting its application, the Minter shall make a KYC report public via appropriate channels, as well as appropriate proof that the requirements set forth in Eligibility Criteria for Permissioned Minters are met:

  • Certified copies of the commercial register and/or trade register and/or register of companies or alike, proving that the company was duly incorporated in the jurisdiction it is providing its services from.
  • Proof of who the ultimate beneficial owners (UBO) of the company are, including proof for negative politically exposed persons (PEP) / sanctions check.
  • Certified copies of all required official licenses required to operate the business and to provide the services outlined in the Adopted Guidance and in the contractual agreements where the Minter is a party to.
  • A legally binding declaration that no insolvency, bankruptcy or similar/comparable proceedings are currently pending or to be anticipated in the foreseeable future in relation to the company.
  • Proof that the company is minimally affiliated (via its shareholders) with or (practically) controlled by any SPV Operator and/or Validator named as approved or permissioned actor in the Adopted Guidance. When there is some level of affiliation, relevant evidence of appropriate corporate governance shall be presented.
  • A legally binding declaration, as long as objectively and legally possible, to set up its business activities in regards to the services and contractual relationships as outlined in the Adopted Guidance.
  • A legally binding commitment, as long as objectively and legally possible, to amend its contractual relationships reflecting potential mandatory changes of the Adopted Guidance.

Where confidentiality concerns emerge, the M0 Foundation can step under Non-Disclosure Agreements to analyze the required documentation and provide a qualified public opinion to the ecosystem.