General Terms and Conditions (“GTC”) for Custody of Crypto Assets
Status November 2020
A) General Information
Tangany GmbH, Agnes-Pockels-Bogen 1, 80992 Munich, Germany, firstname.lastname@example.org, (“Tangany” or “Crypto Custodian”) offers its Users a Wallet for the custody of crypto assets in the sense of Section 1 paragraph 11 sentence 1 number 10, sentence 3 German Banking Act (“KWG”).
Tangany is a crypto custodian supervised by the Federal Financial Supervisory Authority (“BaFin”) and has a (provisional) licence (within the meaning of Section 64y (1) KWG) for crypto-custody business in accordance with Section 1 (1a) sentence 2 no. 6 KWG.
Platform providers and issuers of crypto assets, where Tangany Users make use of various separate services (such as trading in crypto assets), use the Tangany Wallet. Such platform providers and issuers do not belong to Tangany. The relationship between Tangany and its Users as well as the Users and the platform providers or issuers must be strictly distinguished.
The following statements do not constitute legal or tax advice. The User should consult his lawyer for legal advice and his tax advisor for tax advice.
B) Scope of this GTC
The GTCs exclusively regulate the contractual relationship between Tangany and its Users.
Tangany is the provider of the Wallet, crypto custodian and contractual partner to its Users.
These GTCs are the sole contractual basis for the use of the Wallet.
These GTCs do not regulate the use of any platforms or services on the platform, such as the subscription of offers of crypto assets on any platforms. Such services are provided by the respective platform operator or issuer and have no connection with Tangany. Registration on such a platform is exclusively based on separate terms and conditions of the platform operator or issuer. The platform operator may have access to the customer account and the Wallet under certain circumstances. Tangany is never liable for the platform operator or other third parties. A User is not obliged to use Tangany’s Wallet for the crypto assets acquired by him on the platform.
C) Contracting and Opening of Account
The contract is concluded and an account opened for the use of the Wallet after registration of the User by Tangany.
The registration is carried out by instructions from Tangany and is necessary for the opening of a customer account.
After registration the User receives his customer account. The customer account enables the Uer to access the Wallet and the services which Tangany offers with the Wallet.
After successful registration Tangany provides the User with access to his customer account and thus to the services of the Wallet.
The opening of a customer account can be refused by Tangany if there is no successful registration.
D) Registration of the User
As a crypto custodian Tangany has to identify its Users and is obliged to verify their identities. This is done within the scope of the registration of the Users.
Within the scope of the registration Tangany requires an official identification document from the User, which contains a photograph and which fulfils the passport and identification requirements in Germany (e.g. an official identity card, German driving licence or a passport). If the User is a company, further documents (e.g. extract from the commercial register) are required for registration.
Registration of the User already takes place by communicating his personal information (“identity”), which he provides on the platform of the third party. The User’s identity is then verified (“identity verification”). Identity verification is carried out by means of a video identification procedure, for which Tangany uses a service provider.
The User is contacted by the service provider and receives further instructions for the successful completion of the video identification procedure. The User will be informed by the service provider immediately after successful completion of the identification.
The User must inform Tangany for the duration of the business relationship immediately of any change of name, address and e-mail address. This is done via the platform of the third party.
E) Using the Wallet
After successful registration with the platform provider the User has access to the Wallet and can use it. Tangany establishes access to the Wallet for the User. Access is via the customer account provided by the platform provider.
With access to the wallet, every User gets an overview of his/her crypto assets stored by Tangany.
Tangany’s wallet only displays crypto assets which the User has acquired via third party platforms and which Tangany holds in custody for the User. Other crypto assets of the User which Tangany does not keep are not in the Tangany wallet and are not displayed to the User via the customer account.
Further functions of the wallet (exemplary list; these depend on the platform operator or third party):
● The User can view the public address (public key) of his/her wallet
● the User can view past transactions, including the addresses of the sender and recipient of the transaction, time stamp and transaction ID
● depending on the wallet, the User can initiate transactions (this is a function on the Blockchain and not a service of Tangany)
Tangany only provides crypto custody services to its Users.Tangany is responsible for ensuring that the information provided to the User is correctly reproduced as it is visible on the blockchain. However, Tangany is not responsible for the correctness or up-to-dateness of the entries on the blockchain, as these are outside Tangany’s sphere of influence. Tangany does not provide any investment advice and is not involved in the trading of crypto assets.Tangany will not pass on any information from the issuer of crypto assets to the Users and will not support any other measures related to the crypto assets (e.g. measures in connection with exchange or subscription rights).Insofar as legally necessary (for important reasons, in particular for supervisory and regulatory reasons) Tangany is entitled to suspend its services in whole or in part.
F) Costs and fees for Using the Wallet
The opening and use of the wallet is basically free of charge for the User.The platform operator pays a separate fee to Tangany, for which the User of Tangany is not further charged.The User must pay any costs for using the Internet directly to his Internet service provider. The same applies to any costs for the transmission of crypto assets within the blockchain (“network fee”), which the User or the platform operator must pay to the network provider.
G) Rules for Using the Wallet
The following rules apply for successful account opening and further use:
● The User must be at least 18 years old
● The User must have his permanent residence in an accepted country
● The User must act in his/her own name and may not open or maintain an account for other persons
● The User must use his/her own e-mail address
● The User must accept the GTC in the currently valid form
● The User must complete the registration and have updates made if necessary (if changes occur in his person, in the legal situation or from external circumstances)
● The use of the wallet must not violate German and/or international law (which are directly applicable to Tangany or the User)
● The User may not program applications that interact with the Wallet unless Tangany has given its explicit written consent
● The User may not use spider, robot or crawling programs or other technical and/or automated solutions to access or extract data from the Wallet
● The User is obliged to inform himself/herself about his/her rights regarding the stored crypto assets.
Tangany or third parties can only access the respective User’s crypto assets with the User’s express consent.Upon request, Tangany will inform each issuer about the identity of all Users who own crypto assets issued by the issuer within Tangany’s wallet.The wallet may only be used by the User himself/herself. If the User learns that someone has unauthorized access to his/her wallet he/she must inform Tangany immediately.
The User is responsible for the proper taxation of her/his activities with crypto assets. Tangany will not be active here unless there is a legal obligation to do so.
I) Availability of the Wallet
Tangany operates the wallet with the greatest possible availability.However, there is no guaranteed availability of the Wallet. For example, the wallet may not be available due to maintenance, further development or other events beyond Tangany’s control, e.g. the interruption of power and/or data connections or a restriction in the use of the platform.Tangany reserves the right to discontinue, restrict or change the wallet or individual components of the wallet temporarily – for example for technical or legal reasons. Tangany will inform the User and the respective platform operator in advance of any forthcoming changes.
J) Single User Accounts and Omnibus User Accounts
The platform provider may choose between two types of wallets for the custody of crypto assets: wallets managed in accordance with the single user account segregation (“Single User Accounts”) and the omnibus user account segregation (“Omnibus User Accounts”). The Single User Account is used to hold the crypto assets of a single User. Consequently, the User’s crypto assets are kept separate from the crypto assets of the other Users and of Tangany’s own holdings. The Omnibus User Account is used for joint custody of multiple Users’ crypto assets. However, Tangany does not hold its own assets in Omnibus User Accounts.
Essential legal framework of the degrees of separation
● Insolvency law
Subject to applicable local insolvency law, Users’ legal title to crypto assets held directly in wallets by Tangany on behalf of Users should not be affected by an insolvency of Tangany, regardless of whether the crypto assets are held in Single User Accounts or Omnibus User Accounts. In practice, the allocation of crypto assets in the event of insolvency depends on a number of factors. The most important ones are discussed below.
● Application of insolvency law in Tangany´s jurisdiction.
If Tangany becomes insolvent, insolvency proceedings would take place in the jurisdiction applicable to Tangany and would be subject to local, i.e. German, insolvency law. Under German insolvency law, crypto assets held in custody by Tangany on behalf of Users would not be included in the insolvency estate to be distributed to creditors, provided that such crypto assets are still owned by the Users (it should be noted, however, that there is not yet a unanimous legal opinion on the ownership treatment of crypto assets; this is currently being clarified by the legislature). Rather, they would have to be surrendered to the Users in accordance with their respective ownership rights or shares. Accordingly, cryptocurrencies held in custody by Tangany for Users of which Tangany is not the issuer and which are deemed to be the property of such Users and not the property of Tangany should be protected in the event of Tangany’s insolvency or liquidation. This is true regardless of whether the crypto assets are held on an Omnibus User Account or Single User Accounts. Users could also have a priority claim with respect to certain assets in the event of insolvency proceedings. This would be the case if, at the time of the insolvency proceedings, the User does not yet have an ownership interest in a crypto asset, but has already fulfilled its obligations to Tangany arising from the respective crypto transaction. Such a situation could arise if a User acquires crypto assets as part of a crypto transaction but has not yet acquired title to those crypto assets or, if Tangany has wrongfully infringed the User’s title to the crypto assets. In these cases, a User would have a priority claim if, at the commencement of the bankruptcy proceeding, the User had
– has fully performed its obligations to Tangany under the relevant crypto transaction, or
– has not fully performed its obligations, but the unperformed portion corresponds to less than 10 percent of the value of its crypto claim and the User performs its obligations within one week after being requested to do so by the insolvency administrator.
In such cases, the User’s priority claim would be satisfied separately from the claims of non-preferred unsecured creditors. The claim would be settled out of existing crypto assets of the same type that are part of Tangany’s insolvency estate or claims that Tangany has in respect of the delivery of crypto assets of the same type in Tangany’s insolvency estate. Users would then have to make a claim as priority creditors in respect of those crypto assets in the event of Tangany’s insolvency.
● Type of User claims
Tangany holds the crypto assets in custody on behalf of the Users, who are entitled to ownership of these crypto assets by law. This applies both in the case of Single User Accounts and Omnibus User Accounts. However, User claims differ depending on the custody on Single User Accounts and Omnibus User Accounts. In the case of a Single-User Account, each User has a claim to all crypto assets held in the Single User Account. Because crypto assets of different Users are held in common in a single account, in the case of an Omnibus User Account, each User is generally deemed to have a claim to all crypto assets held in the Omnibus User Account pro rata to its crypto asset holdings. Subject to applicable local law, Tangany’s records on the Blockchain will serve as evidence of Tangany’s Users’ entitlement to the crypto assets. The reliability of this evidence would be particularly important in the event of insolvency. Tangany undertakes to distinguish crypto assets held in custody for one User from crypto assets held in custody for another User and its own crypto assets. Compliance with these rules is monitored as part of regular audit checks.
In the event of insolvency, the User can separate his/her crypto assets from the custody and have them transferred to one of his/her other wallets for a fee. This applies both to custody on Single User Accounts and to custody on Omnibus User Accounts.
K) Limitation of Liability
Tangany has unlimited liability for intent and gross negligence and for any culpable injury to life, body or health.Otherwise, Tangany is not liable for lack of economic success, loss of profit and indirect damages in the event of a slightly negligent breach of its essential contractual obligations. An essential contractual obligation in this sense is an obligation, the fulfilment of which makes the implementation of the contract possible in the first place and on the fulfilment of which the User may therefore regularly rely.The liability for slightly negligent breaches of essential contractual obligations is limited to the typical and foreseeable damage at the time of conclusion of the contract.The liability of Tangany in case of data loss is limited to the costs that would have been incurred even if the User had carried out a proper data backup to restore the data. This limitation does not apply to data protection violations against the basic data protection regulation.
L) Indemnification and Compensation
The User indemnifies Tangany from any claims of third parties to which Tangany is exposed due to a breach of contract or unauthorised action by the User, insofar as the User is responsible for the breach of contract or the unauthorised action.The User must compensate Tangany for any damages that Tangany incurs due to a breach of contract or unauthorised action by the User insofar as the User is responsible for the breach of contract or the unauthorised action.
M) Duration and Termination
The use of the wallet and the services of Tangany are granted to the User for an indefinite period.The User and Tangany can terminate the contractual relationship with the other contractual party at any time with a notice period of three (3) months. The termination must be made in text form (for example by e-mail or letter).
Tangany can terminate the contract immediately if there is an important reason.
Important reasons are in particular:
● ongoing operational disruptions due to force majeure that are beyond Tangany’s control (such as natural disasters, fire or power failures for which Tangany is not responsible)
● repeated, serious breaches of the User’s obligations (see “G. Rules for Using the Wallet”)
● once a platform operator or third party (see “B. Scope of this GTC”) terminates the relationship with Tangy and Tangany is not able to provide its services to client
N) Deletion of Data and of the Private Key after Termination
After termination of the contractual relationship, Tangany will delete certain data and information in accordance with legal requirements:
● Tangany deletes all data and information of the User as far as this is legally permitted and technically possible (certain data on the block chain cannot be changed technically)
● Tangany deletes (destroys) the private key, which belongs to the wallet (the public key, on the other hand, is not deleted/destroyed because it is on the blockchain and therefore unchangeable)
Once the private key has been deleted/destroyed, nobody can access the wallet. If the User still has crypto assets in the wallet at the time of termination, he must transfer these to another wallet before the private key is deleted/destroyed. The User will be informed of this again in the course of the termination and will be given the opportunity to transfer his crypto assets to another wallet within two (2) weeks after termination.
O) No Storage of these GTC
These GTC are not saved by Tangany. Every User can download the current version of these GTC as a PDF file and save it on his computer or terminal device.
P) Data Privacy and Secrecy
Q) Amendments to the GTC
Amendments to these GTC shall be offered to the User in text form (e.g. by e-mail or letter) no later than two months before the proposed date of their entry into force.The User can either accept or reject the changes before the proposed date of their entry into force. The User shall be deemed to have given his consent unless he has notified his rejection before the proposed date of entry into force of the amendments. Tangany will specifically draw the user’s attention to this approval effect in its offer.
The contractual relations between the parties shall be governed by the law of the Federal Republic of Germany to the exclusion of the uniform UN Convention on Contracts for the International Sale of Goods (CISG).If the User does not have a general place of jurisdiction in Germany or in another EU member state, or if he is a merchant or a legal entity under public law, or if he moves his permanent residence abroad after these General Terms and Conditions for Consumers have come into effect, or if his place of residence or usual abode is unknown at the time the action is filed, the exclusive place of jurisdiction for all disputes arising from this contract is the registered office of Tangany.The User can use the platform for online dispute resolution of the European Commission, http://www.ec.europa.eu/consumers/odr Tangany is not obliged and not willing to participate in a dispute resolution procedure before a consumer arbitration board.The German language version of these GTCs takes precedence. The non-binding English translation of these GTC does not supersede the German language version.Should individual provisions of these GTC be invalid or unenforceable, this shall not affect the legal validity of the remaining GTC.