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5. Validators

5.1. Contact Information of Currently Permissioned Validators

5.2. Eligibility Criteria for Permissioned Validators

Validators shall fulfill the following minimum requirements:

  • Be a duly incorporated entity, not in a High-Risk Jurisdiction.
  • Have minimum affiliation (via its shareholders) with or (practically) control by any Minter and/or SPV Operator (or the affiliates of those) that is in direct contractual relationship with for the provision of its services. To the extent that the Validator has overlapping stakeholders with other Actors within the ecosystem, it is the duty of the Validator to provide evidence of appropriate corporate governance.
  • Obtain and maintain all necessary authorizations and consents for the performance of its obligations under the Mandatory Contracts it needs to enter into with other ecosystem participants according to the Adopted Guidance.
  • Have technical visibility of the Collateral Storage, and specifically the ability to connect to the SPVs custody accounts, e.g. via API, direct observation of a distributed ledger, or other technical means, as well as to exchange Signatures with the Minter.
  • Have all applicable licenses and permissions in their jurisdiction.

5.3. Obligations of Validators

Validators provide Signatures to Minters for the update of their Collateral Balance and for the removal of RetrievalIDs. This requires the Validators to have full visibility on:

  • The Minter’s Collateral Storage, including its Deposit Accounts.
  • All order flows of such accounts.
  • The appropriate blockchain addresses of a Minter’s Collateral Storage.

In addition to verifying account data and compliance with the eligibility criteria for collateral, the Validators shall perform checks, given that it is in the interest of the Minter to provide maximum transparency on the collateral.

Validators shall, for example, confirm that the Mandatory Contracts are in place between the Minter and the SPV Operator, as well as confirm that the country of incorporation of the SPV is in an Approved Jurisdiction at the time of each confirmation, etc.

In the case that the Validator gains certain knowledge that certain Mandatory Contracts have been made invalid or have been terminated without a valid replacement, the Validator shall no longer provide Signatures until those contracts have been remedied in compliance with the Adopted Guidance.

Should the Validator perceive obviously suspicious or obviously non-compliant mint proposals as well as mint proposals that are the result of obvious human error (by any Minter) it shall cancel such mint proposals within the Mint Delay time frame.

The Validator shall in particular cancel mint proposals of Minters if the Validator was informed by the SPV Operator of such Minter that the Administrative Buffer is not meeting the criteria set out in the Adopted Guidance for as long as such breach exists.

In emergency situations where a Validator has a justifiable reason to believe that a Minter is non-compliant with the Adopted Guidance in a material way, but does not refrain from submitting mint proposals, or a damage to the collateralization of M is to be reasonably expected, the Validator shall use the freezeMinter() function until the situation is remedied.

The use of the freezeMinter() and the cancelMint() functions shall not constitute any basis for claims for damage compensation by the affected Minter and/or its BD Minter against the Validator who has called such function.

Validators shall only terminate a Minter-Validator Agreement with a notice period of no shorter than 90 days, including in the case of a Wind Down. They shall help the Minter to transition to a replacement Validator. If no replacement Validator can be found within this time window, the terminating Validator shall extend its service for the Minter for up to an additional 90 days upon request of the Minter. The right to terminate for cause shall remain unaffected.

5.4. Guidelines for Submission of Permissioning Requests

An application for the permissioning as a Validator requires the whitelisting of the applicant’s public key on the list of permissioned Validators. Before submitting its application, the Validator shall make a KYC report public via appropriate channels, as well as appropriate proof that the requirements set forth in Eligibility Criteria for Permissioned Validators 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.
  • 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 Validator 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 Minter the Validator is in direct contractual relationship with for the provision of its service. 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.