Risk Disclosure Statement
Version of: 07-June-2022
Clarifications added on: 30-January-2023
This policy (the “Risk Disclosure Statement”) is part of the Bitvavo User Agreement. The definitions used but not defined herein are defined in the User Agreement.
This policy is drawn up in English as well as other language versions. In case of any discrepancy the English language version prevails.
User uses the Services entirely at its own risk. By accepting the User Agreement, User also accepts and consents to the risks as included in this Risk Disclosure Statement. This Risk Disclosure Statement includes some of the most principal risks of using the Services, but it cannot and does not include all risks involved in using the Services.
- Due to the volatile nature of Digital Assets prices, User can incur a substantial and even a full loss of Funds by buying and trading Digital Assets. User must carefully consider whether trading Digital Assets is suitable for User’s risk tolerance and financial position. User should not use Funds for the Services that User is not prepared to lose entirely.
- Note that this risk also exists in relation to so-called ‘stablecoins’, i.e. Digital Assets the purpose of which is that these hold a constant and generally 1:1 exchange rate or ‘peg’ with traditional fiat currency. This peg may i.a. be achieved by means of a counterparty committing to exchange the stablecoin for fiat currency or by an algorithm functioning on the blockchain. There is no guarantee that stablecoins maintain this peg and multiple stablecoins have lost this peg in the past. This may in the future and has in the past led to a full or partial loss of funds by holders of stablecoins. The peg may be lost due to a wide range of reasons, including failure of an essential counterparty or failure of the functionality of an essential algorithm. Stablecoins are issued and their functionality is operated and maintained by third parties, over which Bitvavo has no influence. There is generally very little or no recourse in case of a loss of a peg in relation to a stablecoin.
- The execution price of a Market Order may differ significantly from the indicated price. This may be due to a change in price between the time of the Order being initiated by User and the execution of the Order (i.e. 'slippage'). Especially during periods of high volume, illiquidity, fast movement or volatility, any Digital Assets traded on the Platform may be executed at a different rate than indicated via the Services at the time of Users Order.
- 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.
- Limit orders may be taker orders, while User expected it to be a maker order, leading to higher fees for User. This is due to the fact that other limit orders may have been placed in the order book very briefly prior to the limit order of User being placed. This may lead to limit order of User being executed against a better price than User had included in its limit order.
- Digital Asset platforms and associated accounts are targeted frequently by hackers and individuals seeking unauthorized access to User Funds. This may well lead to User Funds being irretrievably lost. It is User’s sole responsibility to safeguard its account, as included in the User Agreement. Aside from choosing a strong password Bitvavo highly recommends that each User activates two factor authentication ("2FA") and enables the anti-phishing functionality provided by Bitvavo.
- Transferring or depositing Digital Assets is prone to several human errors. As examples, User may transfer their Digital Assets to a wrong wallet address or use the wrong blockchain. Due to the nature of the protocols underlying Services, such erroneous transactions cannot be reverterted. It is User’s sole responsibility to ensure any transactions are error-free.
- Especially during periods of high volume and high volatility, access to and functioning of the Platform may become degraded. This could result in limitations on access to User’s Account and any of the Services, including the inability to initiate or complete transactions. This may also lead to support response time delays. Especially during these times Digital Asset rates displayed on the Platform might differ from the rates at which orders are executed.
- Although Bitvavo and the Foundation will take reasonable measures to secure the Bitvavo Digital Asset Wallets and the Bitvavo E-Token Wallets, they cannot guarantee full security. Any defects or breaches can lead to a full loss of Funds. Use of the Bitvavo Digital Asset Wallet is at the risk of User.
- For security and efficiency purposes, the Foundation and Bitvavo may store Digital Assets with third party custody providers or another third party or parties, over which they do not have any control. In case of default, technical failure or a security failure by a third party custody provider, this may lead to a full loss of User’s Funds.
- By using the API (as included in the User Agreement), User may allow third parties to interface with its Account and Bitvavo’s Services. It is important that User researches and trusts such third parties. Providing such access may lead to unwanted or erroneous interactions in relation to User’s Account, which could lead to e.g. loss of funds or loss of functionality of User’s Account or the Services. Such third parties are not in any way vetted or approved by Bitvavo. Use of the API and third parties’ services interacting with the API is at User’s own risk.
- By using the Off-Chain Staking Services, the Off-Chain Staking Digital Assets are no longer held and separated by the Foundation, but the Foundation 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 Lending Partners to earn Rewards, while User remains the beneficial owner of the Off-Chain Staked Digital Assets. Bitvavo Custody obtains a claim on these Lending Partners , while those Lending Partners 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.
- Unlike most currencies or assets that 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, based on technology and rule-based cooperation. There is no central bank or other third party that can take corrective measures to protect the value of a Digital Asset.
- Bitvavo does not have control over, or liability for, the delivery, quality, safety, legality or any other aspect of the Digital Assets that you may purchase, hold or sell using the Services. Bitvavo does not own or control any of the underlying software protocols which govern the operation of the Digital Assets supported by the Bitvavo Service. These underlying protocols may change or cease functioning without advance notice, which may lead to a full loss of Digital Assets or the value thereof.
- Due to the nature of blockchain technology and the underlying protocols thereof, any Digital Assets stored or traded on the platform may be irretrievably lost, corrupted, erased, either temporarily or indefinitely.
- The market, technology and legal framework for Digital Assets is new and uncertain. Bitvavo’s Services operate in a partly regulated field of law. The Service may be subject to changes or even termination as laws and regulations develop.
- The legal classification of (certain) Digital Assets may not be clear and may vary under the laws of different jurisdictions throughout the world. How a Digital Asset qualifies legally and what consequences this has to a User’s rights to the Funds may vary per jurisdiction.
- The legality of the Services in a specific jurisdiction may be uncertain. User is responsible for knowing and understanding how Digital Assets and the Services to these Digital assets will be addressed, regulated and taxed under the laws as applicable to User.
- Materials provided on the Website, the Bitvavo Platform or otherwise by Bitvavo are purely for informational purposes and may change without notice. Bitvavo may provide third party content. Any information provided may be misleading, incomplete or erroneous. User is always solely responsible for assessing the relevance, accuracy, adequacy, and reliability of any materials provided.
- The current tax treatment of the Services has not been conclusively clarified and may also depend on the individual tax treatment of a User. It cannot be ruled out that the tax authorities and courts may adjust or change previous tax assessments on the treatment of income related to the Services.