| 1. |
Before providing any Lending and Borrowing Services to a client, a VASP shall carry out sufficient due diligence to satisfy itself as to the risk profile of such client and transaction at that time and during the course of the Lending and Borrowing Services, the need for and the suitability of any collateral to be provided, and that any collateral is capable of being pledged including under applicable law. |
| 2. |
Before providing any Lending and Borrowing Services on behalf of a third party, VASPs shall ensure that sufficient steps are taken on behalf of such third party to meet the requirements set out in Rule II.D.1 of this Lending and Borrowing Services Rulebook. |
| 3. |
VASPs shall ensure that liquidity risk and market risk are each monitored and tested regularly, and appropriate measures put in place as required to address any such risk in a prompt manner. |
| 4. |
VASPs shall ensure that, to the extent that collateral, including Virtual Assets, is held by them, such collateral is adequate and appropriately protects the VASP against applicable risks. VASPs shall monitor any such risk and record the assessment of such risk regularly and on an ongoing basis. VASPs shall put appropriate measures in place as required to address any such risk in a prompt manner. |
| 5. |
All such risk management and due diligence must be regularly audited by an independent third party.
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