Decentralised Finance (DeFi), Alternative Finance and FinTech

AURUM Law Firm is proud to be a trusted advisor to multiple Financial Technology (FinTech) and Decentralised Finance (DeFi) projects and companies. Since 2016, together with our clients, we have been at the forefront of the FinTech and DeFi revolution that is taking place worldwide, and our crypto attorneys are perfectly placed to understand the sector and know the challenges facing its players.

The clients of our firm include top DeFi protocols, layer 1 blockchain networks, cryptocurrency exchanges, digital wallet providers, p2p lending solutions and payment platform operators originating from all over the world, including the countries of the EU, Switzerland, the US, United Arab Emirates, and countries of the Asia-Pacific region.

AURUM Law Firm has several CMC (CoinMarketCap) Top 100 projects on its client portfolio and our lawyers are constantly taking part in the development of virtual assets legislation and DLT legal frameworks in different countries and jurisdictions. 

Trusted DeFi Attorneys and Advisors

Attorneys and lawyers at AURUM are perfectly placed to support both your current business and anticipated projects, whether you build an innovative DeFi protocol governed by DAO or a centralised cryptocurrency exchange operating under a government license. Staying at the forefront of the industry for years, our DeFi attorneys clearly understand the struggle that our clients face. We are here to help you develop the most efficient and flexible legal structures and strategies that will facilitate your business ambitions while mitigating the regulatory and legal risks involved.

The term “alternative finance” refers to financial products and services that are developing outside the traditional regulated banking and capital market sectors via innovative and predominantly online channels, instruments and systems. Blockchain and cryptocurrencies or, legally speaking, virtual assets, have become the most prominent implementations of alternative finance, so many tend to include decentralised finance (DeFi) and blockchain applications in this category as well.

Among alternative finance products and services are peer-to-peer lending and financing platforms, equity crowdfunding (ECF) solutions, virtual asset/cryptocurrency services (cryptocurrency exchanges, crypto wallets, custody services, etc.), various DeFi protocols and decentralised applications (dApps) that process the users’ funds. Token generation events and all types of token offerings, such as ICO, IEO, IDO, launchpads and liquidity bootstrapping events, also fall within this category.

Major players in these markets are P2P lending platforms, equity crowdfunding platforms and their operators, virtual asset/cryptocurrency exchanges and their operators, digital (crypto) wallet providers, virtual asset custody service providers, companies conducting token sales, funds and insurance products for the purpose of compensating investors in the event of losses, often unincorporated teams developing and operating decentralised financial (DeFi) protocols and solutions, investors and customers.

With the development of the regulations and laws applicable to blockchain and crypto businesses in the vast majority of countries, it has become essential for the projects to understand and properly address the requirements and obligations imposed under the applicable law. Alongside AML/KYC requirements, regulators’ top priorities are protections against misleading promotions or the misuse of client money. Regulatory frameworks impose requirements in relation to the clarity and fairness of promotions, sector-specific AML/KYC requirements, and the segregation of client assets (where applicable). Some jurisdictions may treat loans (and constituent parts of loans) traded on P2P lending platforms as securities, which would, in turn, require an additional license to operate a secondary market.  In the European context, for example, some platforms might be licensed to operate as Multilateral Trading Facilities (MTFs) for this purpose.

At AURUM, we guide our clients and their teams through the regulatory maze to ensure their projects preserve value and remain sheltered from risk. Operating alternative finance or DeFi project requires the definition of functions and activities such projects are (and are not) allowed to carry out, developing a sophisticated legal strategy that would address these matters and suggest efficient instruments that could be employed to mitigate the risks. Our DeFi lawyers are here to help.

Legal Services for the Alternative Finance and Crypto Companies

AURUM Law Firm combines its extensive experience in structuring and supporting blockchain and crypto projects with its profound knowledge of the industry and regulatory specifics to deliver first-class solutions to its clients. Selected services for alternative finance, blockchain and crypto businesses and startups:

  • Development of a sophisticated tax-effective corporate structure for the project.
  • Tax planning and advice.
  • Incorporation of entities and corporate vehicles in any jurisdiction in the world, including in the US, UK, Switzerland, Singapore, Hong Kong, UAE, countries of the EU and Asia.
  • Conducting in-depth review and analysis of the project in order to identify whether the project or its anticipated activities would fall within any specific legal or regulatory framework, and whether the business requires any specific license or permit. Where possible, our lawyers will advise you on the steps that can be taken and measures that can be implemented in order to avoid the application of heavy regulations to your project.
  • Development of the legal and regulatory strategy for the project, products and services to be released or operated.
  • Structuring the token issuance, advising on the tokenomics and token parameters, and other matters relating to the token issuance and offering.
  • Structuring the fundraising for the project, including through the issuance of stock, securities or tokens, advice on the application of securities legislation and regulatory matters.
  • Legal support for the initial token offering, including through ICO, IDO, IEO, launchpad or liquidity bootstrapping event. Advising on the token grant programme and development of token allocation agreements.
  • Structuring the intellectual property, ownership in the most valuable assets relating to the business, and relationship between the founders.
  • Structuring company-employee and company-contractor relationships, including the development of necessary contracts, policies and documentation.
  • Structuring the relationship with the end-users of the project, development of user documentation for the project, including the terms of service, privacy notice (policy), risk disclosure statements, disclaimers, etc.
  • Privacy, data protection and cybersecurity.

Legal Services for DeFi Projects

In addition to the services generally offered to any blockchain or crypto project, DeFi attorneys/lawyers at AURUM Law Firm further offer the following services to the decentralised finance projects and DeFi protocols developers:

  • In-depth regulatory analysis of the project, features and functionality of its dApp and other products, assessment of whether any of the AML/CTF laws, VASP regulations, financial frameworks or securities laws would apply to the project or any particular product to be released or operated in connection with the project.
  • Where possible, our lawyers will advise you on the steps that can be taken and measures that can be implemented in order to mitigate the risks and avoid the application of heavy regulations to your project.
  • Structuring the token issuance, advising on the tokenomics and token parameters, and other matters relating to the token issuance and offering.
  • Structuring the fundraising for the project, including through the issuance of stock, securities or tokens, advice on the application of securities legislation and regulatory matters
  • Advice on the establishment of a decentralised autonomous organisation (DAO) in connection with the project, releasing the products in a decentralised manner, including via the DAO and governance vote, and advising on mitigating the legal risks involved.
  • Advice on “wrapping” the DAO through an appropriate special purpose vehicle, development of the governance and DAO-related procedures.
  • Advice on the best industry practices, techniques and instruments that can be employed or leveraged by the project to achieve decentralisation and autonomy in legal terms.
  • Advice on limiting the liability of the project and founders in connection with the project.

Legal Services for Cryptocurrency Exchanges

In addition to the services generally offered to any blockchain or crypto project, our attorneys and advisors further offer the following services to the companies operating virtual asset/cryptocurrency exchanges:

  • In-depth regulatory analysis of the project, features and functionality of the exchange and services offered to end-users, and assessment of whether any of the AML/CTF laws, VASP regulations, financial frameworks or securities laws would apply to the exchange.
  • Structuring relationships between the shareholders, developing comprehensive shareholders’ agreement, and enhancing protective mechanisms for the shareholders.
  • Setting up corporate governance procedures, developing internal rules and policies.
  • Data protection compliance, privacy, cybersecurity.
  • AML/CTF compliance, development of internal policies, rules and procedures in accordance with the requirements of the applicable laws.
  • Assistance in obtaining licenses, including MSB, DLT and financial licenses (if applicable), VASP registrations, and other permits.
  • Development of necessary documentation, procedures, business plans and projections for the exchange.

Legal Services for P2P and Marketplace Lending Projects, Crowdfunding Platforms

Depending on the business model, the specific jurisdiction, and the legal structure employed, the following regulatory and legal obligations may be applicable to the P2P/marketplace lending projects and crowdfunding platforms:

  • Filing for and obtaining licenses and required governmental permits.
  • Complying with AML/CTF rules specific to the type of business.
  • Delivering necessary standardised information to investors and users, including risk disclosure statements, incentive structures, etc.
  • Separating the assets of the users from the company’s assets.
  • Delivering proper and accurate communication to the users.
  • Complying with other governance requirements, including regular audits.
  • Complying with cybersecurity and reliability requirements.
  • Maintaining the minimum capital amounts.
  • Complying with advertisement and promotion restrictions and requirements.
  • Conducting checks on and verification of borrowers, ensuring all relevant eligibility criteria are met.
  • Complying with caps on investment size and term, and amount of investment per user, as stipulated by the applicable laws.
  • Complying with the obligations regarding the disclosure of specific information.
  • Other requirements set forth by the applicable laws.

How Can Our Attorneys and Advisors help?

AURUM Law Firm helps companies and their teams properly structure their projects. Our team assists clients with the relevant legal frameworks, including helping them to comply with the requirements imposed by the law, apply for the relevant licenses and develop necessary documentation.