Scope

This Conflicts of Interest Policy and Procedure ("Policy") applies to all employees employed by Zero Hash Europe B.V. (“ZHEU” or “Zero Hash”), including temporary workers, contractors and/or secondees, Zero Hash Europe B.V. Management Board and Supervisory Board (the “Board”), and all Zero Hash Holdings employees performing services and/or functions for ZHEU. The terms of this Policy take into account the size and organization of ZHEU, as well as the nature, scale, and complexity of its business, and the range of crypto-asset services that ZHEU provides.

Purpose

The objective of this Policy is to establish, implement and maintain general rules and procedures to identify, prevent, manage and disclose conflicts of interest that may arise in relation to ZHEU. This Policy also sets forth controls designed to ensure compliance with Article 72 of Regulation (EU) 2023/1114 (“MiCAR”) and any other applicable laws or regulations in the Netherlands and other countries where ZHEU or its affiliates do business in.

It is imperative that Zero Hash employees and Board members are constantly aware of their personal and financial interests to help ZHEU maintain compliance with regulations set forth in Article 72 of MiCAR and any other applicable regulations/laws in the Netherlands and other countries where ZHEU or its affiliates do business, as applicable.

Handling Conflicts of Interest

.1 General measures and principles

ZHEU adheres to the following general measures and principles:

• ZHEU and/or connected persons must address and manage any actual or potential conflicts of interest; under no circumstances should conflicts of interest be ignored. 
• The Board will strive to maintain a culture where conflicts of interest are identified at an early stage and connected persons are incentivized to report each situation that may give rise to a conflict of interest. 
• Any matter that may result or has resulted in a conflict of interest must be reported to the Board. To ensure this, the Chief Compliance Officer (“CCO”) has a direct line of real time communication with the Board via instant messaging, video or audio calls, and SMS messaging, and there is also a direct path for ZHEU employees (or a consultant, adviser, or outsourcee) to report such conflict of interest directly to the Board
• to prevent and control the exchange of information between connected persons engaged in activities involving a risk of a conflict of interest, such connected persons must follow specific additional awareness trainings
• Board members are responsible for promptly informing other Board members of any actual or potential conflicts of interest. In situations where a Board member or supervisory board member has or may have a conflict of interest, or where their objectivity or ability to properly fulfil their duties to ZHEU may be otherwise compromised, the affected Board member or supervisory board member must abstain from voting on the matter. Additionally, the affected Board member or supervisory board member should recuse themselves from any discussions related to the matter.
• Board members are required to notify other Board members of any prospective additional positions they plan to undertake, as Board members are not allowed to hold management positions in competing CASPs outside of the ZH group.
• ZHEU has implemented limited Slack channels, separate databases, limited access to ZHEU documents and ZHEU Admin Portal, and restricted access permissions to ZHEU data and documentation.
• ZHEU has implemented an internal control framework to identify, control, and monitor conflicts of interest in order to prevent them from adversely affecting the interest of ZHEU, ZHEU group affiliates, clients, and other third parties (i.e. service providers). The process of handling conflicts of interest can be divided into four stages:

.2 Identification

ZHEU shall take all reasonable steps to identify conflicts of interest that may arise in relation to ZHEU’s business. Identifying conflicts of interest is the most important step in handling conflicts of interest. Employees and Board Members are expected to recognize and avoid potential conflicts of interests or report conflicts of interests if unavoidable to the CCO.

Type of Conflicts of interest

A broad range of situations, relationships or affiliations may give rise to potential or actual conflicts of interest.

Conflict of interest may arise between:

• ZHEU and:
• its shareholders;
• any person directly or indirectly linked to ZHEU or their shareholders or members by control;
• Members of the Board;
• its employees; or
• its clients; or
• Two or more clients whose mutual interests also conflict

Additionally, Article 79 of MiCAR states conflicts of interest may also arise from the following situations:

• Crypto-asset service providers place the crypto-assets with their own clients;
• The proposed price for placing of crypto-assets has been overestimated or underestimated; or 
• Incentives, including non-monetary incentives, paid or granted by the offeror to crypto-asset service providers.

Definition Conflict of Interest

There is no exhaustive definition of what constitutes a conflict of interest. However, for the purposes of identifying the types of conflict of interest that arise in the course of providing crypto-asset services and whose existence may damage the interests of one or more clients, ZHEU takes into account, by way of minimum criteria, whether any person between who a conflict of interest may arise:

1. has a personal relationship with a person, body or entity with interests conflicting with those of ZHEU
2. is likely to make a financial gain, avoid a financial loss, or receive another kind of benefit, at the expense of ZHEU or a client;
3. has an interest in the outcome of a crypto-asset service provided by ZHEU or of a transaction carried out on behalf of a client, which is distinct from the client’s interest in that outcome; 
4. has a financial or other incentive to favor the interest of one or more clients over the interests of another client;
5. carries on the same business as ZHEU or a client; 
6. receives or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monetary or non-monetary benefits or services.

In relation to the services and activities provided, or carried out by, or on behalf ZHEU (or a consultant, adviser or outsourcee), ZHEU has identified circumstances which may give rise to a conflict of interest in the Conflict of Interest Assessment and Register, and has adopted measures which ensure with reasonable confidence that risks of damage to ZHEU or ZHEU clients will be prevented or mitigated.

.3 Reporting identified conflict of interest

Employees and Board Members are expected to recognize and avoid or manage conflicts of interest. This means that employees must be able to identify conflicts of interest when they arise and must take appropriate measures to mitigate or control the conflict of interest.

Self-Disclosure Requirement

Zero Hash employees and Board Members are required to disclose any potential conflicts of interest when they arise. Employees and Board Members are to email the CCO with all pertinent information regarding the potential conflict of interest. If further information is required, the CCO will work with the employee to gather all material information for evaluation.

Disclosure of Conflicts of Others

If there is a conflict of interest between ZHEU and (one of its) clients, ZHEU has to disclose that conflict of interest to the client if ZHEU determines that it cannot effectively reduce the risks of damage to the client’s interests through mitigating measures. Any situation that involves, or may involve, a conflict of interest should be promptly reported to the CCO via email. The employee/Board Member should include all pertinent information they have identified.

After an employee or a Board Member of ZHEU has reported to the CCO a situation that involves, or may involve, a conflict of interest, the following procedure will apply:

1. Determine scope: the CCO must determine the scope of the conflict, which part of the activities or organization of ZHEU could be affected and – if necessary – collect more information about the conflict of interest. 
2. Assessment: the CCO must assess whether there is a risk that the interests of ZHEU or its clients may be damaged as a consequence of the conflict of interest and whether this conflict of interest is material or non-material. 
3. Notification to the Board: the CCO must promptly notify the Chief Legal and Compliance Officer or the Board of Directors (if not already done so) of any material conflict of interest that has been reported, unless such conflict of interest relates to one or more of the ZHEU board members. In the scenario where the conflict of interest relates to one or more ZHEU board members, the CCO will initially only inform the Chief Legal and Compliance Officer, or if the Chief Legal and Compliance Officer is involved in the conflict, only the other board member(s) not involved in the conflict of interest. 
4. Decision material conflicts: In case of a material conflict of interest, the Chief Legal and Compliance Officer must share their analysis and a proposed plan for managing and mitigating any material conflict of interest with the ZHEU board, who will discuss the material conflict of interest as soon as reasonably possible, take external advice if necessary, and decide on the appropriate measures. If a conflict of interest cannot be avoided or resolved, the ZHEU board will decide on whether disclosure of the material conflict of interest is necessary. 
5. Decision non-material conflicts: In case of a non-material conflict of interest, the Chief Legal and Compliance Officer can decide what measure(s) will be taken. 
6. Management of conflicts: Once conflicts of interest are identified, and as appropriate, ZHEU may use one or a combination of the following measures to manage the conflicts of interest: 
7. Avoiding the conflict of interest: In general, ZHEU should avoid any potential or actual conflict of interest, especially when such conflict will impact ZHEU's business or its clients; 
8. Controlling the conflict of interest: In some circumstances, conflicts of interest may be controlled, such as pursuant to an arrangement that is adequate to control the effects of the conflict; 
9. Disclosing the conflict of interest: As appropriate, ZHEU may disclose the conflict to impacted parties. Such disclosure should usually be in writing and approved by the Chief Legal and Compliance Officer. 
10. Additional Specific Measures: Where the controls in place are not sufficient to mitigate or prevent the conflict of interest, then other specific controls will be introduced to mitigate the harm presented by the conflict in question. Accordingly, the Policy shall be updated after the control has been introduced.

.4 Control

The CCO will decide on which measures need to be taken to control the conflict of interest. The CCO decides upon such measures after having analyzed the impact of the conflict of interest on ZHEU and Zero Hash Group affiliates. Such measures could also be an action which aims to prevent the conflict of interest, or end a particular relation.

Based on the evaluation above, if the CCO has decided to permit the conflict of interest, the CCO will determine what measures to implement to control the conflict of interest. These could include, but are not limited to:

• Taking no further action because the likelihood of undue influence and harm or wrongdoing is minimal;
• Requiring the individual involved to step away from discussions or decisions relating to the conflict of interest;
• Appointing independent reviewers to oversee the integrity of the process or decision making relating to the conflict of interest;
• Restricting the access the individual involved in the conflict of interest has; and/or
• Removing the individual from the responsibilities or duties to which the conflict relates.

.5 Recusal Requirements

At times, recusing oneself from a decision-making process may be required from Board Members or Employees due to the potential influence that individual can have over others. Recusal is required if a reasonable person would question the individual's impartiality. When a recusal takes place, this must be documented by the CCO in writing and saved. This document will include the individual, their position, the nature of the conflict, and indication that the recusal is taking place. At the time of the decision-making process, the individual will remove oneself from the discussion until a decision has been made.

.6 Monitoring

The CCO, acting in its capacity as compliance function, periodically, at least yearly, reviews the measures taken to prevent and/or mitigate the risks of ongoing conflicts of interest, which are recorded and retained. In this regard, the CCO will monitor if conflicts of interest have been identified properly and adequate measures have been taken to manage the involved risks.

.7 Disclosures & Record keeping

This section includes relevant measures and procedures in place for documenting cases of conflicts of interest and disclosing conflicts of interest.

Disclosing conflicts of interest

Clients and potential clients of ZHEU must be able to take an informed decision about the crypto-asset services in the context of which the conflicts of interest arise. ZHEU discloses, in an easily accessible and prominent place on its website, the general nature and sources of conflicts of interest and the steps taken to mitigate those conflicts of interest. More specifically, the disclosure contains a detailed and clear description of:

1. the crypto-asset services, activities or situations giving rise, or which may give rise, to conflicts of interest, including the role and capacity in which ZHEU is acting when providing the crypto-asset service to the client;
2. the nature of the conflicts of interests identified; 
3. the associated risks identified in relation to the conflicts of interest referred to in (a) above; d) the steps and measures taken to prevent or mitigate the identified conflicts of interests. 

The disclosures will be made available in English, the language used by ZHEU is in English to its clients, and will be kept up-to-date on an ongoing basis.

Record keeping

Records of reported conflicts of interest are kept by the CCO in the Conflict of Interest Assessment and Register, acting in its capacity as a compliance function, for at least seven years. Distinction must be made between ‘one-off’ conflicts of interests and ‘ongoing’ conflicts of interest. Furthermore, conflicts of interest that may give rise to a material risk of damage to the interest(s) of ZHEU, Zero Hash Group affiliates, clients of ZHEU, or other third parties (i.e. service providers) must be distinguished from other conflicts of interest.

Records of conflicts of interest should, at least, include the following information:

• Description of the conflict of interest, including the name(s) and function(s) of (the) involved employee(s);
• Analysis on the (potential) impact of interest on ZHEU, Zero Hash Group affiliates, clients of Zero Hash, or other third parties (i.e. service providers);
• Measures taken to avoid or mitigate the conflict of interest; and
• Involvement of the Board (if applicable). 

MiCAR Provision

As established in MiCAR Art. 72(1), 72(2), and 72(3), ZHEU must disclose conflicts of interest to clients and prospective clients (End Customers and Platform Operators) on their website, along with mitigation measures. These electronic disclosures must entail sufficient detail for each client to make an informed decision about the crypto-asset service that involves a conflict of interest.

Training

All Zero Hash employees are required to complete internal training regarding the Conflict of Interest Policy and Procedure, in accordance with the Training Policy and Procedure, to help them understand how to identify conflicts of interest and the importance of disclosing any potential conflicts of interest. This obligation applies equally to the members of the Management Board.