Compliance Under MiCA

MiCA regulates crypto-assets not classified as financial instruments under MiFID II. It applies to entities issuing or providing services related to crypto-assets, including governance tokens, utility tokens, and platforms offering exchange or custody services. While Exotic Vaults is structured as a pure DEX, the ecosystem participants, particularly custodians and asset tokenisers, will bear much of the regulatory responsibility.

Mandatory statements (Title II). The white paper and website will display the required statements that the white paper has not been approved by any competent authority and that tokens may lose value, may be illiquid, and transfers may not always be possible.

White‑paper format & updates: White papers will be filed in XHTML with Inline XBRL per Implementing Regulation (EU) 2024/2984 and ESMA’s templates/PoC; material changes trigger a modified white paper with re‑notification before use.

Governance Tokens ($XVAULT)

The $XVAULT token, as a governance token, is likely classified as a utility crypto-asset under MiCA. Although the token does not accrue intrinsic value, its role in governing the protocol brings it within the scope of MiCA’s requirements for transparency, disclosures, and anti-market manipulation measures. The Exotic Vaults Foundation, as the issuer, must publish and notify the relevant authority of a detailed whitepaper outlining the token’s purpose, governance mechanisms, associated risks, and distribution processes.

Furthermore, trading of $XVAULT tokens on secondary markets will require compliance with measures to prevent insider trading and ensure transparent pricing.

RWA Tokenisation (ERC-721 and ERC-20)

Exotic Vaults custodians tokenize RWAs into ERC-721 tokens, while the protocol fractionalizes them into ERC-20 Vault Tokens for trading. Under MiCA, vault fractions and single‑asset claim tokens are “other crypto‑assets” under Title II (neither e‑money tokens nor asset‑referenced tokens) because they do not purport to maintain a stable value by reference to a basket or currency. Offerors/persons seeking admission will notify and publish a Title II white paper; marketing must be fair, clear and not misleading and consistent with the white paper. Physical custody of the asset is not a CASP service. CASP authorisation may be required only for crypto‑asset services (e.g., operating a trading platform, crypto‑asset custody, execution/reception/transmission of orders).

Role of Custodians

The custodians responsible for holding the physical assets backing the ERC-721 tokens will have significant regulatory obligations under MiCA. They must register as CASPs and conduct rigorous KYC/AML checks on asset owners depositing assets into the system. Custodians will also need to provide ongoing assurance of the assets' authenticity, condition, and provenance, ensuring compliance with MiCA’s requirements for the safekeeping of underlying assets. These obligations are central to maintaining the integrity of the tokenised ecosystem.

Exotic Vaults DEX

Where services are provided in a fully decentralised manner without an intermediary, they may fall outside the CASP perimeter; otherwise, a CASP authorisation can be required.. MiCA focuses on centralized entities providing crypto-asset services, and a DEX governed by smart contracts and a DAO does not directly “provide” services in the traditional sense. Since Exotic Vaults does not hold custody of user funds or act as an intermediary, it avoids CASP registration requirements. However, the protocol must ensure its design aligns with MiCA’s principles of transparency and security, particularly concerning on-chain governance and asset trading.

Decentralisation & CASP perimeter: A fully decentralised protocol without an identifiable intermediary can sit outside MiCA’s CASP regime (Recital 22). If an Exotic Vaults‑branded EU interface onboards users, routes orders, or intermediates trades, the operator will treat that activity as CASP‑in‑scope and comply (including Travel Rule for crypto‑asset transfers per Reg. 2023/1113 and the EBA Travel Rule Guidelines effective 30 Dec 2024). The protocol itself remains non‑custodial and permissionless.