Public conflicts of interest disclosure

1. Introduction

Knaken Cryptohandel B.V. (Knaken) is a crypto-asset service provider (CASP) as defined in art. 3(1)(15) of the Regulation on Markets in Crypto-Assets (MiCA). As a CASP, Knaken is obliged to implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest.

2. Knaken’s policy on preventing conflicts of interest

Knaken has adopted a policy on preventing conflicts of interest (the Conflicts of Interest Policy). This Conflicts of Interest Policy applies to Knaken’s shareholders, Management Board members and employees. The purpose of Knaken’s Conflict of Interest Policy is to identify, prevent, manage and disclose conflicts of interest.

Knaken ensures that all its shareholders, Management Board members and employees are able to identify all possible conflicts of interest in time. Knaken’s shareholders, Management Board members and employees are obliged to immediately report any situation in which there is a (potential) conflict of interest. Knaken’s compliance officer and Management Board takes appropriate measures to avoid the (potential) conflict of interest.

Through this disclosure, Knaken aims to inform you on the general nature and sources of conflicts of interest that have arisen or might arise, and the steps that Knaken has taken to mitigate these conflicts of interest.

3. General identification of conflicts of interest

Knaken has identified two categories of potential conflicts of interest:

• Conflicts of interest potentially detrimental to clients of Knaken; and
• Conflicts of interest potentially detrimental to Knaken.

Conflicts of interest that are potentially detrimental to clients may arise when Knaken or Knaken shareholders or members, any person directly or indirectly linked to Knaken or Knaken’s shareholders or members by control, Knaken’s Management Board members or Knaken’s employees (the Connected Persons) are in any of the following situations:

• Knaken or the Connected Person is likely to make a financial gain, avoid a financial loss, or receive another kind of benefit, at the expense of the client;
• Knaken or the Connected Person has an interest in the outcome of a crypto-asset service provided to a client of Knaken or of a transaction carried out on behalf of that client, which is distinct from that client’s interest in that outcome;
• Knaken or the Connected Person has a financial or other incentive to favour the interest of one or more clients of Knaken over the interest of another client of Knaken;
• Knaken or the Connected Person carries on the same business as the client of Knaken; or
• Knaken or the Connected Person receives or will receive from a person other than the client of Knaken an inducement in relation to a service provided to that client, in the form of monetary or non-monetary benefits or services.

Conflicts of interest that are potentially detrimental to Knaken may arise when a Connected Person:

• has an economic interest in a person, body or entity with interests conflicting with those of Knaken;
• has a personal relationship with a person, body or entity with interests conflicting with those of Knaken;
• has or has had a professional relationship with a person, body or entity with interests conflicting with those of Knaken;
• has a political relationship with a person, body or entity with interests conflicting with those of Knaken; or
• carries out conflicting tasks, is entrusted with conflicting responsibilities or is hierarchically supervised by someone who is in charge of conflicting functions or tasks.

4.  General measures to prevent conflicts of interest

Conflicting activities

Certain activities of Knaken may lead to conflicts of interest with other activities of Knaken. For that reason, Knaken has adopted measures to prevent conflicts of interest arising from:

• Connected Persons being involved in conflicting activities;
• Connected Persons involved in conflicting activities sharing information;
• Connected Persons supervising another Connected Person that is involved in activities conflicting with those of the supervising Connected Person;
• Connected Persons supervising two or more conflicting activities.

Remuneration

Remuneration for employees, Management Board members and other natural persons involved in the provision of Knaken’s services may create a conflict of interest that encourages those persons to act against the interests of any of Knaken’s clients or impair their abilities to fulfil their duties and responsibilities in an objective and independent manner.

Therefore, Knaken has adopted a remuneration structure that is balanced between fixed and variable components, so that the remuneration structure does not favour the interests of Knaken or its Connected Persons against the interests of any client, in both the short, medium and long term. This remuneration structure is based on both quantitative commercial criteria and qualitative criteria, reflecting compliance with applicable regulations, the fair treatment of Knaken’s clients and the quality of services provided to Knaken’s clients.

Personal transactions

Personal transactions of Connected Persons, and in some instances family members of Connected Persons (Immediate Family) may entail a conflict of interests of those Connected Persons with Knaken or Knaken’s clients. Therefore, Knaken has adopted a policy on personal transactions, which outlines rules for its Connected Persons who trade crypto-assets. The policy emphasises compliance with market regulations to avoid conflicts of interest. Key provisions include:

• Pre-trade approval for personal trades.
• Blackout periods restricted trades after token generation events.
• Reporting and training requirements.
• Annual declarations of crypto holdings; and
• Monitoring of personal and family transactions to prevent market abuse.

Gifts

The acceptance of gifts from clients or third parties can lead to (the appearance of) a conflict of interest. For this reason, Knaken has adopted a strict policy on accepting gifts, which entails:

• a prohibition on accepting gifts in money;
• a maximised value of physical gifts; and
• the obligation to report gifts to the Compliance Officer.

Promotion campaigns

Carrying out promotion campaigns may lead to conflicts of interest between a Connected Person and Knaken. For this reason, Knaken has adopted a strict policy on carrying out promotion campaigns, which entails:

• ensuring that the independence of the Connected Person entrusted with the promotion campaigns is beyond doubt;
• a prohibition to have any kind of relationship with participants in the promotion campaign; and
• the obligation to report (doubts regarding) relationship with participants to the Compliance Officer.

Commission

Commissions (also known as referral fees) paid to a third party for bringing in new clients may involve a risk of a conflict of interest.

Knaken does not accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third-party, or a person acting on behalf of a third party, in relation to the provision of portfolio management of crypto-assets to Knaken’s client.

Ancillary activities

Ancillary activities of Connected Persons may lead to conflicts of interest between the Connected Person and Knaken or Knaken’s clients. Therefore, ancillary activities are not allowed to be conducted by Connected Persons unless the Compliance Officer has provided permission for a specific activity, irrespective of whether the position is paid or unpaid.

5. Evaluation and updates

Knaken maintains up-to-date records of all situations giving rise to actual and potential conflicts of interest, including the relevant crypto-asset services and activities, and of the measures taken to mitigate such conflicts in the relevant situations. This disclosure is regularly updated on the basis of those records and evaluated annually by the Compliance Officer for its accuracy, effectiveness and compliance with applicable regulations, addressing any deficiencies in that respect.