Risk Disclosure StatementLast updated: 20-09-2020
This policy (the “Risk Disclosure Statement”) forms part of, and utilizes certain terms that are defined in the User Agreement and User is accepting and consenting to the risks described in this policy by accepting the User Agreement and using the Services. Using the Services involves significant risks. User should not use the Services unless User understands the associated risks. User should not use Funds for the Services that User is not prepared to lose entirely as there is an inherent risk that losses will occur as a result of using the Services. This Risk Disclosure Statement discusses some of the principal risks of the Services, but it does not and cannot disclose all risks and other (risk related) aspects involved in using the Services. User confirms to have had the opportunity to ask questions and receive answers form Bitvavo concerning the risks related to the Services prior to using the Services. Please read the following carefully to understand the principal risks related to the Services.
Risks and other uncertainties associated with the Services include, but are not limited to, the following:
- The legal classification of (certain) Digital Assets may not be clear and may vary under the laws of different jurisdictions throughout the world. Whether and on what basis a Digital Asset mag constitute ‘property’, an ‘asset’ or a ‘right of any kind’ and might vary from jurisdiction to another. This can mean that the legality of the Services to Digital Assets in a specific jurisdiction may be uncertain. User is aware of this legal risk and is responsible for knowing and understanding how Digital Assets and the Services to these Digital assets will be addressed, regulated and taxed under the law as applicable to User.
- The market for Digital Assets is still new and uncertain. Unlike most currencies or assets, which are backed by governments or other legal entities, or by other commodities such as gold or silver, Digital Assets are a unique type of asset, backed by technology and trust. Digital Assets are an as-yet autonomous and largely unregulated global system of Digital Asset service providers and individuals. Investors put their trust in a digital, decentralised and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity. Consequently, market prices for Digital Assets can be highly volatile and unpredictable. Whether the future market price for a Digital Asset will move up or down is a speculation and unknowable and Digital Assets may even become worthless. There is no central bank or other third party that can take corrective measures to protect the value of a Digital Asset. User is aware of this market risk and should be cautious about Digital Assets.
- Bitvavo does not offer securities services, is not registered under the financial supervision or securities laws of any jurisdiction and the provision of the Services has not been and will not be registered under the financial supervision or securities laws of any jurisdiction or otherwise approved by financial or securities regulators in any jurisdiction.
- Bitvavo is not a bank and/or regulated as a bank or other depository institution. User’s Account is not a deposit account or a bank account. The Services are not part of a depository or bank program or subject to the EU deposit guarantee schemes or the protections of any comparable organization anywhere in the world. Potential risks include, but are not limited to, security breaches, risk of contractual breach, and risk of loss even though the Funds are managed and held by the Foundation on behalf of the Users, which acts on an exclusively basis for Bitvavo as a bankruptcy remote vehicle for safeguarding User’s Funds, and which takes reasonable measures to protect User Funds. By using the Off-Chain Staking Services, the Off-Chain Staking Digital Assets are no longer held and separated by the Foundation, but the Foundations assigns – with the consent of the User – its duties relevant for the Off-chain Staking Digital Assets to Bitvavo Custody and transfers the Off-chain Staking Digital Assets to Bitvavo Custody, who may transfer these Digital Assets to third parties to earn Rewards, while User remains the beneficial owner of the Off-chain Staked Digital Assets. Bitvavo Custody obtains a claim on these third parties, while those third parties may not be in a position to (fully) return the Off-chain Staking Digital Assets (in a timely fashion) to Bitvavo Custody. This could result in additional default and/or insolvency risks of Bitvavo Custody in which case Bitvavo Custody may not be in the position to redeliver the Off-chain Staking Digital Assets. This could result in a loss of Digital Assets belonging to a User. User is aware of these counterparty risks and should be wary of allowing third parties to hold and use their Digital Assets for any reason.
- Markets for Digital Assets have varying degrees of liquidity. Some are quite liquid while others may be ‘illiquid’, which means there can be a scarcity of Users who are willing to trade at any one time. Thinly traded or illiquid markets have potential increased risk of loss because they can experience high volatility of prices and in such markets market participants may find it impossible to liquidate market positions except at very unfavourable prices. There is no guarantee that the markets for any Digital Asset allow you to establish or liquidate positions at favourable prices or will be even active and liquid when desired.
User should carefully assess whether User’s financial situation and tolerance for risk is suitable for using the Services.