Reserve / Escrow / Treasury Requirements & Disclosures

[KRicoyLL]

All views my own. Not a lawyer, etc.

Reserve / Escrow / Treasury Requirements & Disclosures

Summary

Whether intending to mint or hold a reserve of coins / tokens, unlike traditional securities, many projects aim to utilize an authorized fiduciary in order to act as the "Reserve" of their digital economy. In these cases there should also be certain minimum reporting requirements to go along with the other disclosures made by the Initial Development Team, and I would argue they should go on even after Network Maturity where appropriate, even if taken on by another entity. Even when tokens are no longer securities, this is a key element of Token Economics that will have ongoing impact, and along with creating the concept of sufficient decentralization and network maturity, we need to think about what it will mean to have economic maturity in this new landscape.

Implementation

I'm not sure the best way to draft this, but I see the pseudo-law as the following:

Reserves & Escrows

Any reserves distributed or held by the Initial Development Team intended for release to participants must disclose the following:

• Custody Controls - How funds are stored.

• Handling Controls - How funds are handled, authorized for withdrawal, and any vesting periods; if not disclosed along with (c)(3)(i), the release schedule for these funds should also be disclosed.

• Safeguards - Risk analysis & mitigation

Release Schedule Changes

Such that the release schedule referenced in (c)(3)(i) should ever change, these changes and the reasoning must also be disclosed before the effects take place.

Treasury

For projects intending to mint or issue coins on an ongoing basis aside from the core Open Network protocol governed by consensus, such that the release schedule referenced in (c)(3)(i) should ever change, these changes and the reasoning must also be disclosed before the effects take place.

All disclosures involving reserves, escrows, & treasuries must be publicly accessible via the registered public website.

Considerations

• Requirements - what are the minimum fiduciary requirements, custodial expectations and standards that are acceptable?
• Network Maturity - cont'd reporting requirements, even when tokens no longer a security?
• These ongoing efforts must be non-essential to the core Open Network protocol.