１ Purpose
The purpose of this document is to disclose our screening system and procedures when handling new cryptographic assets, to demonstrate that our screening is properly conducted, and to help us in our efforts to protect our users.
２ Definitions
The definitions of terms used in this document are as follows
Issuance Status: Information that indicates the status of cryptographic asset issuance (e.g., issuer, quantity issued, etc.).
Transaction Status Information that indicates the status of the distribution of cryptographic assets (e.g., trading volume, market capitalization, etc.).
Usage Status Information indicating the status of cryptographic asset use cases.
Project The blockchain network in which a cryptographic asset is used and the totality of the activities involved in the formation of the ecosystem around that network.
Issuer means a group or individual, such as a company, foundation, project team, or community, that issues cryptographic assets.
Related party: A person involved in a project who is determined by the Company to be a key member of the project.
３ Screening System for Handling
The Company's screening system and procedures for handling cryptographic assets are as follows
(1) Structure of the handling examination system
Under an appropriate internal control environment based on a three-line system, we conduct handling examinations under the following division: Line 1 (General Business, and System divisions) Line 2 (Compliance division) Line 3 (Internal audit division)
(2) Independence of handling examination system
The first-line department, including the sales department, selects the issues to be handled, and the second-line department examines the handling of those issues. Therefore, the sales department is not directly involved in the process or results of the handling examination. The third-line division maintains sound governance of this initiative by conducting internal audits to check the overall handling examination process after the fact and taking corrective actions as necessary.
(3) Verification System for Handling Risks
We conduct the following 3-step verification of handling risks.
Primary verification : Line1division
Secondary verification : Line2 division
Third : BoD
(4) Procedures for making decisions based on the results of the review
Prior to the handling examination, the first-line department conducts a basic investigation of several issues selected through market research, etc., and selects issues for examination based on comprehensive consideration of their profitability, appropriateness, and other factors. The staff member in charge of the second-line division then conducts a handling examination of the subject issues and reports on the results, and if there are no problems with the content, the second-line division approves it. Next, the second-line department submits all examination results to the Corporate Planning Committee after confirmation by the third-line department, and reports the results to the Corporate Planning Committee. The Corporate Planning Committee verifies the risks of the cryptographic assets handled, and if necessary, the Risk Management Committee separately examines risk management measures, examines the necessity of additional examinations, and decides whether to suspend the handling of cryptographic assets. The results of deliberations by all committees are submitted to the Board of Directors, which makes the final decision regarding the handling of cryptographic assets.
(5) Retention of documents
The second-line department manages the materials used in the process and results of the handling examination, and in principle, stores them until the handling of the relevant issue is completed at the Company.
４ Perspectives of Handling Examination
The perspectives of each item in our handling examination are as follows
(1) Examination of cryptographic assets handled (in accordance with the JVCEA Self-Regulatory Regulations and our internal rules)
Outline of cryptographic assets handled, issuance status, transaction status, usage status, technology of cryptographic assets and record ledgers, and other necessary matters.
(2) Examination items related to internal systems
Matters related to the security management system for cryptographic assets; Matters related to the technical response capability of cryptographic assets; Matters related to the company's transaction processing capability; Matters related to financial durability; Matters related to demand forecasts; Matters related to conflicts of interest with users; Matters related to pricing methods and transaction conditions at the start of handling; Matters related to information provision to users and explanations; Other necessary matters and explanations to users; and other necessary matters.
(3) Matters related to risk verification of cryptographic assets handled
Market risk, credit risk, system risk, AML/CFT risk, legal risk, reputation risk, and our own risk
