7. Legality and Compliance

Cryptocurrencies, in general, are subject to an ever-changing legal and regulatory framework. To ensure full and ongoing compliance with all applicable requirements, the Ditex Ecosystem has been conducting assessments and monitoring the regulatory environment closely. This section provides some background into the respective key elements regarding the Ditex Ecosystem and DITEX.

7.1. Regulatory implications

DITEX is not backed by or linked to any underlying asset, currency, financial instrument, or another unit of value, and has no value stabilization mechanisms. Therefore, DITEX tokens are not provided with a claim in the form of a right to redeem against fiat currencies, financial instruments, commodities, or assets.Furthermore, DITEX tokens do not entail any promise or right to a share in any future company earnings, participation in the capital, voting rights, principal or interests, future capital flows, or passive income. Additionally, DITEX does not entitle token holders to acquire or sell any securities, nor do they entitle them to a cash settlement. The latter also means that DITEX tokens cannot constitute a derivative (such as stock options or futures). As derived from this reasoning, DITEX tokens do not confer rights comparable to transferable securities, thus they do not meet the substantive financial instrument or transferable securities qualification. Since DITEX is a free-floating cryptocurrency, not backed by or linked to any asset and without imposing any redemption right, it does not represent a unit of collective investment undertaking either. There is no central institution responsible for DITEX such as a central bank or any other similar organization, so there is no institution that supervises them or issues the units. Cryptography is used to secure the DITEX tokens while decentralized networks are used to manage them.Thus, DITEX tokens should not qualify as a so-called “security token”, which is a token that has the characteristics of a security or financial instrument, and it should not qualify as a so-called “stablecoin”, which is a token that has implemented price stabilization mechanisms by linking their value to one or several fiat currencies or other assets or instruments. While it does grant some utility, the majority of its characteristics do point towards DITEX tokens being categorized as a substitute payment token, which is neither a “stablecoin” nor an “e-money token” as de- fined under the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on Markets in crypto-assets, and the amending Directive (EU) 2019/1937. It can be accepted by natural or legal persons as a means of exchange and can be transferred, stored, and traded electronically.To the best of one’s knowledge and due care, the results of the legal assessments conducted point to- wards the reasonable conclusion that the payment tokens, up until this point in development, have not triggered any regulatory, registration, or licensing requirements, and in particular, the use of DITEX for substitute transactions itself is not an activity subject to authorization.

7.2. Measures to mitigate illicit activity

AML regulations aim to combat illicit activities such as money laundering from criminal activities or the financing of terrorism. Such regulations require, in particular, that financial intermediaries conduct background checks and verify the origin of assets. Possession and use of DITEX, transactions, and services related to the use of DITEX can be subject to certain requirements, limitations, or additional measures imposed by law for identity verification and detection of money laundering, terrorist financing, fraud, or any other financial crime. Different entities within a (geographical or operational) sector may pose a higher or lower risk depending on a variety of factors, including products, services, customers, geography, business models, and the strength of the entity’s compliance pro- gram. Consequently, access to and use of DITEX may be dependent on the third-party service integration of the Polygon Blockchain into their systems and their services, whereby such integration and the utilization of DITEX and the Polygon Blockchain can be subject to different requirements and limitations of use imposed by third-party service providers or by different regulatory standards and restrictions.Such restrictions and limitations can, for instance, be applicable for third-party cryptocurrency exchanges that enable users to buy or sell DITEX, as they act as gatekeepers to the markets in crypto-assets, including DITEX. Such cryptocurrency exchanges (and other similar third-party service providers) are usually responsible for complying with applicable AML regulations.As such, cryptocurrency exchanges or similar third-party service providers might reject or cease to provide any use or integration of DITEX due to specific restrictions imposed by the AML regulations.

7.3. Risk

The user acknowledges certain risks about the use of services within the Ditex Ecosystem, blockchain technology in general, crypto-asset protocols, and related technologies. When using services within the Ditex Ecosystem, users should closely consider the risks outlined in this whitepaper and other risks not specified herein.

High price volatility

The price of cryptocurrencies, including the DITEX token, might be subject to significant price fluctuations over short periods regularly (high volatility).

​Low market liquidity

The market liquidity of cryptocurrencies can be low and may negatively impact the possibility to sell cryptocurrencies, including DITEX. The DITEX may not be liquid.

Insufficient interest

The Ditex Ecosystem might not be successful and might be dissolved due to a lack of interest and/or support from its users or the public.

Regulatory actions

Cryptocurrencies in general have been the subject of regulatory scrutiny by various regulatory bodies around the globe. The Ditex Ecosystem or the use of DITEX could be affected by regulatory inquiries or regulatory actions, which could adversely impact the Polygon Blockchain network or the use and utilization of DITEX. The use of services within the Ditex Ecosystem may require authorization (s) in some jurisdictions to be used as such. Each user should independently and of their own accord make sure the use of DITEX is legally permitted within their jurisdiction.​

Taxes

Possession and trading in crypto-assets, including DITEX, may be or become subject to tax and/or any other duty, for example, due to changes in legislation or a user’s circumstances.