3.10.1. Provision of key features document to Person

(1) A Digital Asset Service Provider which carries on any one or more of the following Regulated Activities in relation to Digital Assets:

(a)   Dealing in Investments as Principal;

(b)   Dealing in Investments as Agent;

(c)   Advising on Investments; and

(d)   Arranging Deals in Investments.

must not provide that service or services to a Person unless it has provided the Person with a key features document.

(2) The key features document must contain the following information if known (or, if not known after having taken reasonable steps to determine this information, a clear statement must be provided that such information is not known):

(a) risks associated with and essential characteristics of the Digital Assets, including where appropriate making reference to the location of any publicly available white paper setting out the features of the Digital Assets;

(b) risks associated with and essential characteristics of the Digital Asset;

(с) whether the Digital Asset is admitted to trading within the AIFC;

(d) (where the Digital Asset Service Provider is involved in Providing Custody or Arranging Custody of the Digital Asset) whether the Client, the Digital Asset Service Provider or a third party is responsible for providing a Digital wallet service in respect of the Digital Asset, and any related risks (including at whose risk the Client’s Digital Assets are held in the Digital wallet, whether it is accessible online or stored offline, what happens if keys to the Digital wallet are lost and what procedures can be followed in such an event);

(e) how the Client may exercise any rights conferred by the Digital Assets; and

(f) any other information relevant to the particular Digital Asset which would reasonably assist the Client to to make informed decisions in respect of it.

(3) The key features document must be provided in good time before the relevant service is provided to a Client, so that the Client to make an informed decision about whether to use the relevant service.

(4) The key features document does not need to be provided to a Client to whom the Digital Asset Service Provider has previously provided that information, if there has been no significant change since the information was previously provided.

(5) A Digital Asset Service Provider may use a key features document prepared by another Person if it has taken reasonable steps to ensure that the information in that document is complete, accurate and up to date.

(6) If a Digital Asset Service Provider provides a Client with a key features document prepared by another Person, the Digital Asset Service Provider remains accountable to the Client to whom the key features document is provided as if that document were prepared by the Digital Asset Service Provider itself.

3.10.2. Risk warnings

(1) A Digital Asset Service Provider must display prominently on its website the following risk warnings relating to Digital Assets:

(a) (except in the case of a Central Bank Digital Currency) that Digital Assets are not legal tender or backed by a government;

(b) that Digital Assets are subject to extreme volatility and the value of the Digital Asset can fall  quickly (including, in respect of a Fiat stablecoin or Commodity stablecoin, if it loses its stability peg);

(c) that an investor in Digital Assets may lose all, or part, of the value of their investment;

(d) that Digital Assets may not always be liquid or transferable;

(e) that investments in Digital Assets may be complex making it hard to understand the risks associated with participating in them;

(f) that Digital Assets can be stolen because of cyber attacks;

(g) that trading in Digital Assets is susceptible to irrational market forces;

(h) that the nature of Digital Assets may lead to an increased risk of Financial Crime;

(i) there being limited or, in some cases, no mechanisms for the recovery of lost or stolen Digital Assets;

(j) the risks of Digital Assets with regard to anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement;

(k) that the nature of Digital Assets means that technological difficulties experienced by a Digital Asset Trading Facility Operator may prevent access to or use of a Client’s Digital Assets;

(l) that participating in Digital Assets is not comparable to participating in traditional investments such as Securities; and

(m) that there is no recognised compensation scheme to provide an avenue of redress for aggrieved participants.

(2) If a Digital Asset Service Provider presents any marketing or educational materials and other communications relating to a Digital Asset on a website, in the general media or as part of a distribution made to existing or potential new Clients, it must include the risk warning referred to in 3.10.2 (1) in a prominent place at or near the top of each page of the materials or communication.

(3) If the material referred to in 3.10.2 (1) is provided on a website or an application that can be downloaded to a mobile device, the warning must be:

(a) statically fixed and visible at the top of the screen even when a person scrolls up or down the webpage;

(b) included on each linked webpage on the website; and

(c) If, due to limitations on the medium of communication used, it is not practicable to provide the material referred to in DAA 2.8.10(1), reference may be made instead to the fact that participation in Digital Assets is a high risk investment, accompanied with a link to the relevant section of the Digital Asset Service Provider’s website where the material referred to in DAA 2.8.10 (1) is provided.

3.10.3. Past performance and forecasts of Digital Assets

(1) A Digital Asset Service Provider must ensure that any information or representation relating to past performance, or any future forecast based on past performance or other assumptions, which is provided to or targeted at Retail Clients:

(a) presents a fair and balanced view of the Digital Assets and associated services to which the information or representation relates;

(b) identifies, in an easy-to-understand manner, the source of information from which the past performance is derived and any key facts and assumptions used in that context are clearly explained; and

(c) contains a clear and prominent warning that past performance is not necessarily a reliable indicator of future results. 

(2) A Digital Asset Service Provider should in providing information about the past performance of a Digital Asset:

(a) consider the knowledge and sophistication of the audience to whom the information is targeted;

(b) fully disclose the source and the nature of the past performance presented;

(с) ensure that the time period used is not an inappropriately short period, or a selective period, that is potentially misleading; and

(d) if a comparison is being made, the comparison is fair, clear and not misleading.