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  • Part V – Client Virtual Assets Rules

    • Application and Interpretation

      1. Client VAs means all Virtual Assets held or controlled by a VASP on behalf of a client in the course of, or in connection with, the carrying on of any VA Activity, except for—
        a. Virtual Assets immediately due and payable to a VASP for the VASP’s own account, such as fees for services provided to a client;
        b. amounts payable by the VASP for expenses incurred on behalf of the client; and
        c. other charges that are due and payable to the VASP.
      2. Client VAs are held or controlled by a VASP if they are—
        a. directly held by the VASP in an account or VA Wallet;
        b. held in an account or VA Wallet in the name of the VASP;
        c. held by a legal entity, or in an account or VA Wallet in the name of a legal entity, controlled by the VASP; or
        d. the private keys and/or seed phrase of the VA Wallet are held or controlled by the VASP.
    • A. Treatment of Client VAs

      1. VASPs must have in place the necessary policies, systems and controls, appropriate to the nature and scale of their operations, to ensure compliance with this Part V of this Compliance and Risk Management Rulebook.
      2. Client VAs are not depository liabilities or assets of the VASP.
      3. VASPs shall hold Client VAs in separate VA Wallets from all Virtual Assets of the VASP.
      4. VASPs must hold Client VAs on a one-to-one basis and shall not authorise or permit rehypothecation of Client VAs, unless they have explicit prior consent from the client providing discretionary authority to do so, and are appropriately authorised and Licensed by VARA to carry out all relevant VA Activity[ies] in respect of such Virtual Assets.
      5. All proceeds related to Client VAs, such as “airdrops”, “staking gains” or similar proceeds shall accrue to the client’s benefit, unless the VASP has the client’s prior consent specified in a written agreement with the client or otherwise. VASPs may decide not to collect or distribute certain proceeds, including where such proceeds are below a value to be determined by the VASP, provided that the VASP has disclosed this to the client and obtained acceptance in accordance with all applicable laws.
    • B. Proof of Reserves

      1. In addition to the Reserve Assets requirements in the Company Rulebook, VASPs shall comply with all requirements stipulated by VARA from time to time, including as part of a VASP’s licensing process, in order to demonstrate that assets held in reserve cover all of their liabilities with respect to Client VAs.
    • C. Reconciliation

      1. VASPs must maintain a system to ensure that accurate reconciliations of the Virtual Assets owned by each client are carried out daily. The reconciliation must include—
        a. a full list of individual client credit ledger balances, as recorded by the VASP; and
        b. a full list of individual client debit ledger balances, as recorded by the VASP.
      2. VASPs must notify VARA where there has been a material discrepancy with the reconciliation which has not been rectified.