πGlossary
Last updated
Last updated
Word | Definition |
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AML
Combating money laundering and terrorist financing. The financial sector is exposed to the risk of money laundering and terrorist financing. As such, it is subject to anti-money laundering and combating the financing of terrorism (AML/CFT) provisions.
Buy Back & Burn
utility token business model aimed at buying back service tokens using the company's turnover.
FIAT
Fiat money is a type of currency that is not backed by a commodity, such as gold or silver. It is typically designated by the issuing government to be legal tender, and is authorized by government regulation. Since the end of the Bretton Woods system in 1971, the major currencies in the world are fiat money.
(Blockchain) Layers
Level 1 blockchains (or "layer 1" or "L1") are generally open-source software programs, which create a network of independent computers (known as decentralization) that create a consensus on the content of the blockchain. There are several types of consensus (proof of work, proof of stake). L1s can be permisionless (anyone can participate) or permisioned (the addition of a participant is subject to conditions). Level 2 blockchains build on the content of Level 1 blockchains, but correct the impact of decentralization on transaction speed, volume and cost. Level 3 blockchains are decentralized software and interfaces that enable the creation of an end-user application.
LCB-FT
"Lutte contre le blanchiment des capitaux et le financement du terrorisme" (French). See AML.
OTC
over-the-counter method of exchange outside the public market, with a price freely determined by the seller and the buyer. Generally used to exchange large blocks of tokens that the cash market could not absorb.
Security token
In the EU a security token is an asset based on distributed ledger technology (DLT) that represents the ownership right of an instrument, which can be either a freely convertible security, i.e. a security subject to the MiFID Regulation, or the so-called non-MiFID security (see also Securities Market Act). The US SEC refers to the Howey Test to determine whether an investment contract exists and a security is being sold. According to this test, an investment contract exists if 1) thereβs an investment of money, 2) in a joint enterprise, 3) with the expectation of a profit, 4) which is obtained through the efforts of others. Categories: a) Equity Securities: refers to stocks or a share of ownership in a company b) Debt Securities: allow companies to borrow money from investors and repay the loan with interest c) Derivative Securities: contracts between 2 or more parties d) Hybrid Securities: Hybrid securities include debt and equity securities characteristics. A typical example of a hybrid security would be a convertible bond, a corporate bond that can be converted into shares of stock for the company providing the bond.
Spot
token exchange market with cash payment through an anonymous aggregated order book of buyers and sellers.
Stablecoin
any cryptocurrency designed to have a relatively stable price, typically through being pegged to a commodity or currency or having its supply regulated by an algorithm. MiCA regulation will limit the use of this type of cryptocurrency on centralized exchanges.
Utility token
type of token whose main function is to provide rights and/or access to a service or product offered by a company. e.g.: access to a privileged commercial offer, access to the right to have the toke bought out, access to the right to share in the company's income.