Legal. It’s that one word that we all dread to hear, but as much as we hate it, there’s no avoiding it either.
In all seriousness, it’s about time we talk about the legal aspects of the Tiberius Coin. If you want to protect you and your investment, there are a few things you need to understand. A firm legal structure is currently the only thing that protects you from potential scams. And properly reading through a legal framework is probably the only way how you can be sure that you’re not signing up for something like this:
“11. No Representations & Warranties by Tether: Tether makes no representations, warranties, or guarantees to you of any kind. The Site and the Services are offered strictly on an as-is, where-is basis and, without limiting the generality of the foregoing, are offered without any representation as to merchantability or fitness for any particular purpose.” (Source Tether Legal https://tether.to/legal)
Think about it. We’re not talking about a niche product offered through a shady marketing campaign, but rather one of the largest cryptocurrencies. It’s actually the largest stable-coin with a market capitalization of almost $3 billion USD. While this might scare you (and actually it should) we see this as a huge opportunity.
Although we’re truly convinced that the conventional banking system is jammed with unnecessary regulatory procedures, and blockchain technology is the answer to free us from the time and money we waste to access the financial markets, we strongly believe that it’s our duty to provide both necessary and sufficient legal coverage to our clients.
We want you to understand the legal framework that makes Tiberius Coin what it is. Because in order for us to provide maximum transparency, we want to use this opportunity to walk you through the details of our legal aspects. This means providing you with a detailed overview, what it means, what the key features are, and everything related to the legal side of things.
Here’s the Tiberius Coin in a nutshell.
The purchase of the Tiberius Coin is equivalent to the purchase of physical metal. That’s it.
However, because the coin shall provide special key features like transferability, and because physical delivery might be something that some buyers won’t consider, there’s quite a lot that needs to happen in the background. It took a lot of work to come up with a legal structure that reflects the following:
- The Tiberius Coin grants direct ownership
- It allows for physical delivery of metals.
- The price of the coin is not based on synthetic investments like bonds, futures, options, etc.
- The price depends on the metals prices fluctuation that are in the basket.
- The moment the coin is sold, all legal obligations need to be transferred to the third party.
- The investment in metal must not be reflected on our accounts (which is important — if Tiberius Crypto goes belly up — the metal must belong to the owner, not us).
- In order to protect the Tiberius Coin holder, all investments need to be separated from Tiberius Crypto.
To provide all of these features, the initial purchaser of the Tiberius Coin is entering into three contractual agreements:
- Purchase agreement
- Custody agreement
- Agreement to hold possession on behalf of the Tiberius Coin holder
Don’t worry, I’m going to walk you through it all.
The Purchase Agreement
The first is a purchase agreement of a basket of metals. An additional clause in the purchase agreement is the obligation to put the metals in a bonded warehouse for storage. The initial purchaser will buy the metal from Tiberius Crypto (“TIC”), which will buy metals in the market, or from other companies. The initial buyer purchases a fixed metal allocation, when the purchase price is deposited in the accounts of TIC.
The warehouse receipts are issued in the form of instruments payable to the order endorsed in blank. The endorsement in blank allows the initial holder of the warehouse receipts to transfer the warehouse receipt like a bearer security. The initial holder of the warehouse receipts will be Tiberius Cypto. Each warehouse receipt represents a certain quantity of base metals and precious metals with a fixed allocation, and which are priced at the point in time the Tiberius Coin has been issued. The metal is held in allocated form at the warehouse. The warehouses are bonded warehouses. The underlying physical metals are therefore not subject to VAT.
The Custody Agreement
The second agreement is a custody agreement. The custody agreement entered into between the initial purchaser and TIC sets forth that the warehouse receipts will be held in custody by TIC.
TIC will replace the individual warehouse receipts with a global certificate. The certificates will be kept by TIC in a safe of a reputable Swiss bank. Each initial purchaser will get shared ownership in the global certificate representing the underlying warehouse receipts. This ownership share corresponds to the share of each purchaser in the total amount of warehouse receipts held in custody. This share is an uncertificated security.
TIC will hold the global certificate and the underlying individual warehouse receipts in custody for the benefit of the holder of the Tiberius Coin. The initial purchaser can transfer its share in the global certificate. He can transfer its ownership to third parties by selling the share in the ownership and transferring the Tiberius Coin, which is a blank endorsed uncertificated security.
The custody agreement entitles a third party — which must itself identify with the required amount of Tiberius Coins — to request the delivery of the warehouse receipts which are the underlyings of the global certificate. The custody agreement will automatically be terminated in case someone requests the delivery of the underlying warehouse receipts. The underlying warehouse receipt will only be delivered to a holder of the required amount of Tiberius Coin for requesting physical delivery of the underlying metals.
The Agreement of Possession
The third agreement is an agreement that the custodian of the warehouse receipts/global certificate shall hold possession in these securities for each future holder of the Tiberius Coin. TIC has agreed to hold the global certificate and the underlying warehouse receipts in possession for any potential future purchaser of a share in the ownership of the global certificate.
The transfer of the ownership is done based on a sales agreement, and the agreement that the custodian will possess the securities for any future owner to whom the shared ownership will be transferred. The transfer of the ownership in the security is the transfer of the underlying metal itself (Art. 925 CC). The initial purchaser agrees however that the Tiberius Coin is in this context a means of identification of the owner of the dynamic ownership in the global certificate respectively the underlying warehouse receipts.
The Classification of the Tiberius Coin
Tiberius Coin is a security in the form of an uncertificated security. It is not a derivative, because it is not a financial instrument that derives its value from an underlying. Tiberius Coin is a means of transfer of the underlying commodity itself (see Art. 925 CC). Tiberius Coin is an asset token.
The warehouse receipts and global certificate will be held in custody by TIC. The securities are held in custody in the safe of a bank and are segregated from the other assets of TIC. They are not deposits in the sense of the Banking Act. The holder of Tiberius Coins can at all times require the delivery of the underlying warehouse receipts according to TIC. Holding securities in custody is an activity of a financial intermediary subject to AML-requirements. The warehouse receipts are securities, the global certificate however not, because it is not apt for mass trading. There will only be one global certificate.
Holding securities in custody does not require a securities dealer license. There are thus no legal consequences under the securities dealer act. TIC will however identify anyone requesting physical delivery of the warehouse receipts according to the AML-identification requirements. It will not deliver the warehouse certificate in case of suspicion of money laundering activities and will require additional evidence of the background of the purchase of the Tiberius Coins.
What does this mean?
If you read and understood our legal framework you should understand that there’s actually nothing we can do besides buying metal for you and storing it.
What does this mean for you? It means you can use the tokens as a means of payment, a store of wealth, to diversify their portfolio, as a pure investment, or to trade physical metals without involving third-parties like banks and other clearing agencies.
There’s never been an easier way to access the metal markets.
We hope that we did not bore you to death with all that legal talk, but it’s important. You now know what makes Tiberius Coins so special. We aren’t just another crypto, we are democratizing the metal markets and allowing you to take part in one of the most exciting growth stories.
October is coming fast. We’re ready, are you?
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