Frequently Asked Questions

A Permissioned Investor is equivalent to a MiFID 2 "Professional Client" classification. This means all Investors are KYC verified, UBO identified, AML checked, sanction screened, prove a Source of Wealth and sign an Investor Subscription Agreement either directly or under a reliance letter from an eligible counterparty such as a Broker, Exchange, etc. 

From an Investor's perspective, the Market exists On-Chain, which means the investment, trade and settlement of digital securities happens onchain. Therefore the Investor's interface with the Fund is onchain, conversely, the Fund is responsible for all of the structuring, legals and administration of the Fund, investors do not need to be exposed to the mechanics of the Fund in order to invest, trade or settle their digital securities.

There are 2 modes of onboarding supported, direct and reliance onboarding. The goal of onboarding is to apply MiFID 2 “Professional Client” eligibility criteria and to permission the Investors Web3 Wallet to participate in the market.

Once an Investor's wallet address is permissioned, they can invest, trade, settle, request calculations, etc, etc. If an Investor's wallet address is not permissioned, they cannot perform any market activity. This is a key protection, it prevents the breach of MiFID 2 rules and breaking the prospectus regulation exemptions.

Only KYC/AML-verified clients who are permissioned on the Frictionless protocol can send or receive issued by Frictionless Markets.

Verified holders can freely transfer tokens between each other directly. For added market protection, any attempt to transfer tokens to a non-permissioned wallet address (such as that of an ineligible investor) will result in the transaction being blocked, and a SARs report will be automatically generated.

No, Whilst Holders(permissioned) are free to transfer between each other on a direct transfer basis. As a key market protection, if a transfer is attempted to a non-permissioned wallet address (such as an in-eligible Investor) the transaction will fail and a SARs report is automatically raised.

If you have accessed Frictionless Markets directly and you are not referred there via broker, dealer or investment advisor, you are required to be onboarded by Frictionless Markets S.à.r.l. directly, which will result in Frictionless Markets S.à.r.l. and/or its affiliates conducting the KYC, AML, PEP and sanction screening, which if successful will be used to accredit you and then associate your wallet address(es) with the permissions layer on the protocol, so you may invest, trade and settle digital securities.

No, A Web3 Wallet is an anonymous blockchain address. The protocol preserves the Investor identity off-chain in ISO-27001 secure privacy-protected data structures. Only the Web3 Wallet address is used on-chain, there is no publicly available information to link the Investor identity to the Web3 Wallet address.

Yes, a basic advantage of Web3 public permissioned protocols, is forensic audibility whilst being privacy-protecting. 

Your Web3Wwallet address is recorded on the public blockchain and the transactions on that wallet are visible, but the wallet does not reveal your identity as an institutional Investor. The volume of tokens and the historical trades made within tokenized funds are visible, but only between other anonymous wallet addresses.

The permissions layer is on the public blockchain, it is a smart contract that you can call with your wallet address to confirm if you are permissioned.

We have collaborated closely with specialist legal counsel, our structuring team to implement a structure which complies with securities laws, tax laws, anti-money laundering laws, and other regulatory requirements.

All tokens issued by Frictionless Markets are registered notes that adhere to the MiFID II prospectus regulation, the 2004 Securitization Law of Luxembourg, the 2005 Financial Collateral Act of Luxembourg, and the Blockchain Acts I, II, and III of Luxembourg.

Each token issued by Frictionless Markets originates from its own segregated compartment within the bankruptcy-remote structure of Frictionless Markets and is classified as a financial instrument. All tokens issued by Frictionless Markets are classified crypto assets recorded in the DLT that qualify as financial instruments under the laws of 2004, 2005, and 1915, and therefore currently fall outside the scope of the MiCA regulation.

Frictionless Institutional Deposit Tokens are currently available in the following currencies:

- fsUSD - U.S. Dollars
- fsGBP - British Pounds Sterling
- fsEUR - Euros

The following currencies are in the final approval stage and will soon be available on our portal and smart contracts:

- fsHKD - Hong Kong Dollars
- fsJPY - Japanese Yen
- fsAED - Emirati Dirham
- fsCHF - Swiss Franc
- fsSGD - Singapore Dollar

We continuously assess market demand for additional currencies. If you are interested in other currencies, please reach out to our Institutional Sales team.

The funds underpinning Frictionless Institutional Deposit Tokens are custodied in global tier-1 banks in the E.U. Unlike a stablecoin Issuer, Frictionless does not actively invest your funds, ensuring you can access them and redeem them instantly. This mandate is attested daily by our registered independent Fund Accountants, ensuring you can always redeem your Frictionless Institutional Deposit Tokens

Our transparency and attestations are publicly recorded on the blockchain.

Structurally, Frictionless Institutional Deposit Tokens are registered financial instruments in the form of bankruptcy-remote cash/currency securitization undertakings. 

See the Terms of Service

Holders can redeem their institutional deposit tokens for fiat to their registered bank account by either:

1. Submitting a redemption request on the Frictionless portal account.
2. Transferring their tokens to the settlement address.

Redemption requests received before 16:00 CET will be processed on the same day, and redemption requests received after 16:00 CET will be processed on the next business day. Redemption requests received on a non-business day will be processed on the next business day.

Yes, Frictionless supports instant ERC20 Swaps via our regulated Circle partnership and other partnerships with VASP-registered custodians in the E.U.

For more info on ERC20 Swaps see here