Legal & Regulatory Risks
Legal and regulatory changes could adversely affect the Digital Assets market. Regulation of Digital Assets and Token offerings such as, cryptocurrencies, blockchain technologies, and cryptocurrency exchanges is undeveloped and likely to rapidly evolve. In addition, regulation of Digital Assets varies significantly among international, federal and local jurisdictions and is subject to significant uncertainty. Various legislative and executive bodies may in the future, adopt laws, regulations, guidance, or other actions, which may severely impact the development and growth of the Digital Asset markets. Failure by SMART Advertco or Clients of the Advertco Platform to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines. Exchanges to trade Digital Assets such as the Advertco Platform face an uncertain regulatory landscape in many jurisdictions such as the European Union, China and Russia. Various jurisdictions may, in the near future, adopt laws, regulations or directives that affect the Advertco Platform. In particular, authorities could prohibit the possibility to trade or redeem Digital Assets. The effect of any future regulatory change is impossible to predict, but such change could be substantial and materially adverse to the development and growth of the Advertco Platform. New or changing laws and regulations or interpretations of existing laws and regulations, may materially and adversely impact the value of Digital Assets and the rights of the holders of such assets.
The legal status of certain Digital Assets may be uncertain. This can mean that the legality of holding or trading them might be impacted. Whether and how one or more Digital Assets and Tokens constitute property, or assets, or rights of any kind may also seem unclear. Clients are responsible for knowing and understanding how Digital Assets and Tokens will be addressed, regulated, and taxed under applicable law.
Market risk is the possibility of Clients experiencing losses due to factors that affect the overall performance of the markets in which they are involved. The market for Digital Assets is still evolving and uncertain. Trading in Digital Assets bear the risk of total loss of the funds invested. The market for Digital Assets is highly volatile and unpredictable. If the value of Digital Assets will move up or down, or whether a certain Digital Assets will lose all or a substantial part of its value, is unknown. This applies both to long- and short-term investments.
Liquidity risk is the financial risk that for a certain period of time a given Digital Asset cannot be traded quickly enough in the market without impacting the recoverable price. Markets for Digital Assets have varying degrees of liquidity. Some are quite liquid while others may be illiquid. Illiquid markets can amplify volatility. An active market for Clients to sell, buy, or trade Digital Assets or products derived from or ancillary to them cannot be ensured. Furthermore, any market for Digital Assets may abruptly appear and/or vanish. SMART Advertco makes no representations or warranties about whether a Digital Asset that may be traded on the Advertco Platform may be tradeable any point in the future, if at all. Any Digital Asset is subject to delisting without notice or consent. Where possible SMART Advertco will apply best efforts to notify Clients of such cases in advance.
Investment Horizon risk
Investment horizon is the term used to describe the total length of time that an investor expects to hold a security or a portfolio. Investment horizons can range from short-term, just a few days long to much longer-term, potentially spanning decades. The length of an investment horizon will often determine how much risk an investor is exposed to and what their income needs are. Generally, investments in Digital Assets are not suitable for clients who depend on any income resulting from such investments.
Transaction risk is the exchange rate risk associated with the time delay between entering into a contract and settling it. The greater the time differential between the entrance and settlement of the contract, the higher the transaction risk, because there is more time for the exchange rates to fluctuate.
Execution risk is understood as the risk that a transaction will not be executed within the range of recent market prices or within the stop order limits that have been set by an investor.
A settlement risk occurs when the Client must pay the purchase price of a Digital Asset in advance but does not actually receive the Digital Asset until later. In this event, the risk is that the Client will pay the purchase price and receive the Digital Assets late or even not at all. Conversely, when one Client is obliged to deliver Digital Assets which have been sold, the Seller may not simultaneously receive the purchase price from the Buyer.