Structuring the Crypto Market Making Business — Case Study

Overwiew

Aurum advised a crypto market making and trading company on navigating regulatory and compliance challenges, strategically designing the corporate structure to minimize compliance obligations, and determining the optimal commercial structure to alleviate regulatory burdens

Challenges:

The main challenges we encountered encompassed:

• Regulatory and compliance implications of a market making and trading business.

• Designing a corporate structure that minimizes compliance requirements without compromising operational efficiency.

• Developing a commercial structure that reduces regulatory burdens while maintaining business agility.

• Crafting transactional documents tailored to the unique needs of the MM business, ensuring legal robustness and compliance.

Legal Strategy:

Aurum's approach was multi-faceted, beginning with an exhaustive analysis of the regulatory landscape affecting crypto market making activities in multiple jurisdictions. Our team leveraged its deep understanding of financial services regulation to design a corporate structure that strategically circumvented excessive compliance burdens. We identified a commercial structure that would allow the client to operate within the legal framework while minimizing regulatory challenges. Additionally, Aurum developed a suite of transactional documents specifically designed for the nuances of the MM business, ensuring comprehensive coverage of operational, legal, and compliance aspects.

Actions Taken:

• Conducted a detailed regulatory and compliance review, pinpointing areas of potential legal risk and opportunities for structural optimization.

• Devised a corporate structure that reduced compliance burdens while ensuring the client's business objectives were met.

• Recommended a commercial structure that provided flexibility and minimized regulatory impact.

• Drafted and refined a set of transactional documents essential for the MM business, encompassing legal instruments and operational protocols to ensure full legal compliance and risk mitigation.

Outcomes:

The client successfully implemented the recommended corporate and commercial structures, which enabled the client to operate in an unregulated environment while keeping the desired commercial structure intact. The transactional documents provided a solid legal foundation for the MM business, facilitating secure and compliant operations.

The strategic advice and tailored solutions offered by Aurum enabled the client to navigate the complex regulatory environment confidently, positioning the company for sustained growth.

Lessons Learned:

This case study underscores the critical importance of strategic legal and regulatory planning in the crypto sector. It demonstrates that with expert guidance, companies can effectively reduce regulatory burdens and craft a legal framework that supports business agility and compliance. The case also highlights the necessity of proper transactional documents in addressing the unique challenges of the crypto market making business.