Newton Crypto Ltd.

Appendix B – Terms and Conditions on Custodial Arrangements

Newton’s custodial arrangements with Coinbase Custody Trust Company, LLC (Coinbase Custody) and BitGo Bank & Trust, National Association (BitGo Bank and Trust) are subject to the following conditions:

1. Definitions and Interpretation

1.1 In these Terms and Conditions:

"Acceptable Crypto Custodian" means a custodian of crypto assets that satisfies the Common Crypto Custodian Requirements set out in Schedule A, Part I and the applicable tier-specific Requirements set out in Schedule A, Part II.

"Acceptable Tokenized Asset Custodian" means a custodian of tokenized assets that satisfies the Tokenized Asset Custodian Requirements set out in Schedule C

"Approved Crypto Custody Location" means an Acceptable Crypto Custodian that has been approved by the Corporation in accordance with section 5 for the purpose of holding Crypto Assets.

"Approved Tokenized Asset Custody Location" means an Acceptable Tokenized Asset Custodian that has been approved by the Corporation in accordance with section 5 for the purpose of holding Tokenized Assets.

"Crypto Asset" means a Digital Asset that is not a Tokenized Asset.

"Digital Asset" means an asset that is recorded, transferred, or represented using distributed ledger technology, cryptography, or similar digital systems, and includes both Crypto Assets and Tokenized Assets.

"Internal Custody" means the holding of digital assets directly by the Dealer Member, using wallets, blockchain addresses, systems or infrastructure that are owned, operated, and controlled by the Dealer Member and which provide the Dealer Member with exclusive access to and control of the private keys associated with the digital assets it holds.

"Segregated Location" means a location designated in accordance with section 8.1 for the holding of client digital assets that is under the exclusive control of an Approved Crypto Custody Location, Approved Tokenized Asset Custody Location, or the Dealer Member's approved internal custody function.

"Tokenized Asset" means a digital representation of a traditional financial asset that confers legal rights and obligations equivalent to an underlying traditional financial asset or instrument, and that is issued or recorded using distributed ledger or similar technology. Tokenized Assets may include digital representations of deposits, debt, equity, or other financial instruments as well as certain digital assets designed to maintain a stable value by reference to a fiat currency (also referred to as stablecoins).

1.2 For greater certainty, approval or recognition of a custodian as an Acceptable Securities Location under the CIRO Rules does not, on its own, constitute approval as an Approved Crypto Custody Location or an Approved Tokenized Asset Custody Location.

2. Custody of Crypto Assets

2.1 The Dealer Member shall ensure that all crypto assets are held either:

1. with one or more Approved Crypto Custody Locations; and / or
2. in accordance with the internal custody provisions set out in section 8.

3. Custody of Tokenized Assets

3.1 The Dealer Member shall ensure that all Tokenized Assets are held with one or more Approved Tokenized Asset Custody Locations.

4. Capital requirements

4.1 The Dealer Member shall provide out of its Risk Adjusted Capital an amount equal to

1. the value of crypto assets held at any custodian that is not an Approved Crypto Custody Location, and
2. the value of tokenized assets held at any custodian that is not an Approved Tokenized Asset Custody Location,

excluding proprietary positions fully provided for out of the Dealer Member's Risk Adjusted Capital.

5. Approval of Acceptable Crypto Custodians and Acceptable Tokenized Asset Custody Locations

5.1 Prior to holding digital assets with a custodian, the Dealer Member shall apply in writing to the Corporation for approval of the custodian as an Approved Crypto Custody Location or an Approved Tokenized Asset Custody Location, as applicable.

5.2 The Dealer Member's application shall be approved by the Dealer Member's Board of Directors and shall include documentation satisfactory to the Corporation, including

• a crypto-asset custodian certificate;
• audited financial statements of the custodian;
• applicable SOC 2 or ISAE 3000 (Type 2) reports; and
• a copy of the custody agreement between the Dealer Member and the custodian.

5.3 For greater certainty, the Dealer Member shall apply under this section for approval as an Approved Tokenized Asset Custody Location if they wish to hold Tokenized Assets whether for its own account or on behalf of its clients.

6. Custody Limits

6.1 The Dealer Member shall ensure that the value of crypto assets held at Approved Crypto Custody Locations does not exceed the applicable limits set out in Schedule B, calculated as a percentage of all crypto assets held by the Dealer Member, excluding proprietary positions fully provided for out of the Dealer Member's Risk Adjusted Capital.

6.2 For greater certainty, no custody limits apply to Tokenized Assets held at Approved Tokenized Asset Custody locations.

7. Internal Custody

7.1 The Dealer Member may hold under Internal Custody up to 20% of the value of crypto assets held for clients and for its own account, provided that the Dealer Member meets requirements equivalent to those applicable to Tier 4 Crypto Custodians, except to the extent that a requirement is expressly limited to third-party custodians or is inapplicable by its nature to internal custody.

7.2 Proprietary positions fully provided for out of the Dealer Member's Risk Adjusted Capital are excluded from the limit in section 7.1.

7.3 The Dealer Member may hold Tokenized Assets for its own account or on behalf of its clients without limits provided that the Dealer Member has been approved under section 5 as an Approved Tokenized Asset Custody Location.

8. Segregation

8.1 The Dealer Member shall arrange with Approved Crypto Asset Locations, and with Approved Tokenized Asset Custody Locations, and configure the custody technology it uses for Internal Custody, to designate specific addresses as Segregated Locations such that the digital assets held at Segregated Locations are not available to satisfy claims of the Dealer Member's creditors, including under the bankruptcy and insolvency act or a provincial or foreign law dealing with bankruptcy and insolvency, other than to satisfy claims of the Dealer Member's clients with respect to their digital assets.

8.2 The Dealer Member shall, at the discretion of the Corporation, provide additional evidence, including legal opinions, assurance reports, or attestations, in form and substance satisfactory to the Corporation, where necessary to confirm that the segregation outcomes required under section 8.1 is achieved and maintained.

8.3 The Dealer Member shall calculate segregation requirements and compare them to the quantities they hold in designated Segregated Locations at least once each business day, excluding weekends and statutory holidays.

8.4 The Dealer Member shall transfer digital assets necessary to meet segregation requirements into designated Segregated Locations without unreasonable delay following the calculation required under section 8.3.

8.5 The Dealer Member shall determine, based on an assessment of operational need, maximum levels of proprietary positions that Dealer Member will hold in Segregated Locations at any given time. The assessment shall:

• identify the specific operational reasons requiring proprietary assets to be held in segregation; and
• incorporate historical and reasonably projected requirements for each such reason.

8.6 The Dealer Member shall transfer out of designated Segregated Locations, without unreasonable delay, proprietary digital asset positions that exceed the maximum levels determined under section 8.5 following the calculation required under section 8.3.

8.7 The Dealer Member shall undertake to buy in any position it is required to segregate but which it has not received within 5 business days.

9. Policies and Procedures

9.1 The Dealer Member shall establish, maintain, and enforce policies and procedures reasonably designed to ensure ongoing compliance with all applicable requirements under these Terms and Conditions and any applicable law or regulation.

10. Monitoring limits

10.1 The Dealer Member shall monitor compliance with:

1. the custody limits applicable to an Approved Crypto Asset Location as set out in section 6; and
2. the internal custody limits as set out in section 7,
3. at least once weekly and more frequently when holdings approach the applicable limits.

10.2 Where the Dealer Member identifies a breach of any limit referred to in section 10.1, the Dealer Member shall, within one business day, take all necessary steps to bring the value of crypto assets into compliance with the applicable limit.

11. Reporting to the Corporation

11.1 The Dealer Member shall promptly notify the Corporation of any material change that could reasonably be expected to affect the eligibility of an Approved Crypto Custody Location or an Approved Tokenized Asset Custody Location.

11.2 The Dealer Member shall report to the Corporation, in the manner and frequency specified by the Corporation, the quantity, value, and location of each digital asset traded on its platform.

11.3 The Dealer Member shall report to the Corporation any breaches described in section 10 within one business day:

1. the details of the breach;
2. the steps taken by the Dealer Member to remediate the breach and the results of those steps; and
3. where compliance cannot be achieved within one business day due to extenuating circumstances, a description of those circumstances, the measures to be taken to achieve compliance, and the expected timeline.

12. Regulatory Consequences for Repeated Breaches

12.1 Where the Dealer Member experiences repeated breaches of:

• the custody limits applicable to an Approved Crypto Asset Location, as set out in section 6; or
• the internal custody limits, as set out in section 7,

the Corporation may designate the Dealer Member in Early Warning Level 2 in accordance with the applicable IDPC Rules.

12.2 Where the Dealer Member has been designated in Early Warning Level 2 pursuant to section 12.1, the Corporation may direct the Dealer Member to reduce its holdings at the Approved Crypto Asset Location or internal custody location in respect of which the applicable limit has been breached, in the manner and within the timeframe specified by the Corporation.

12.3 Any direction issued under section 12.2 are subject to the notice and review provisions of IDPC Rule subsection 4136(2) and (3).

12.4 For greater certainty, nothing in this section limits or restricts the Corporation's authority under applicable CIRO Rules, including its authority to designate a Dealer Member in Early Warning, impose additional terms and conditions, or take any other supervisory or enforcement action as the Corporation considers appropriate.

Schedule A - Crypto Custodian Eligibility Framework

Part I - Common Crypto Custodian Requirements (All Tiers)

All Acceptable Crypto Custodians shall:

A. Minimum Capital

Maintain capital in excess of the applicable minimum set out below, based on audited financial statements prepared under IFRS or U.S. GAAP.

B. Assurance Reports

Provide a SOC 2 or ISAE 3000 (Type 2) report covering all elements of the technology infrastructure and based on the Trust Service Criteria relevant to Security and Availability.

C. Establishment and Registration

Be regulated in a Basel Accord country as a bank or trust company, in good standing with its regulator, and legally and functionally independent of any exchange or marketplace.

D. Custody Agreement

Enter into a written custody agreement with the Dealer Member, that is enforceable in the crypto custodian's jurisdiction, that, at a minimum, establishes:

1. the role of the crypto custodian as fiduciary for the Dealer Member;
2. the standard of care, such that the crypto custodian shall be liable for losses arising from its negligence, fraud, or willful misconduct;
3. the crypto custodian's liability for failures in technology that are reasonably within its control;
4. the crypto custodian's obligation to provide the Dealer Member with audited financial statements at least annually and SOC 2 reports at least annually, each within 90 days of the applicable reporting period-end; and
5. the crypto custodian's obligations with respect to sub-custodians, including:
   1. to identify proposed sub-custodians and obtain the Dealer Member's prior written consent before transferring crypto assets held for the Dealer Member to a sub-custodian; and
   2. to provide the Dealer Member with ongoing disclosure of the assets held by each sub-custodian.

E. Annual Approval

Be approved annually by the Dealer Member's Board of Directors, with certification filed with the Corporation.

F. Policies and Procedures

Represent that it maintains policies and procedures describing its methods and practices for securing crypto assets.

Part II - Tier-Specific

Requirements

Tier 1 Crypto Custodians

In addition to Part I, a Tier 1 Crypto Custodian shall:

• provide SOC 2 / ISAE 3000 assurance covering Confidentiality and Processing Integrity
• be supervised by a regulator that (1) includes a department dedicated to the licensing of entities providing custody services and performs prudential oversight functions; and (2) has an acceptable bilateral regulatory information sharing arrangement with the Corporation, or with a Canadian provincial or territorial securities regulator, or with a Canadian federal prudential regulator provided that such federal prudential regulator maintains a bilateral regulatory information-sharing arrangement with the Corporation or with a Canadian provincial or territorial securities regulator
• maintain insurance appropriate for its assets under administration, including a Fidelity or equivalent policy covering losses from all crypto asset storage locations.

Tier 2 Crypto Custodians

In addition to Part I, a Tier 2 Crypto Custodian shall:

• be governed by legislation related to insolvency and the treatment of segregated assets, such that (1) the custody contract is enforceable in the crypto custodian's jurisdiction; and (2) the legal environment in the crypto custodian's jurisdiction is such that assets segregated for customers are preserved from the estate of a bankrupt or insolvent crypto custodian.
• be supervised by a regulator that (1) includes a department dedicated to the licensing of entities providing custody services and performs prudential oversight functions; and (2) has an acceptable bilateral regulatory information sharing arrangement with the Corporation or with a Canadian provincial or territorial securities regulator, or with a Canadian federal prudential regulator, provided that such federal prudential regulator maintains a bilateral regulatory information-sharing arrangement with the Corporation or with a Canadian provincial or territorial securities regulator.
• provide SOC 2 / ISAE 3000 assurance covering Confidentiality and Processing Integrity, and crypto asset-specific risks
• provide independent cybersecurity assurance by a qualified professional
• represent that it engages an independent professional to perform penetration testing annually
• provide assurance reports prepared by qualified independent professionals assessing the crypto custodian's controls with reference to recognized frameworks for third party risk management and business continuity or be supervised by a regulator that has specified public minimum requirements regarding third party risk management and business continuity
• maintain insurance appropriate for its assets under administration, including a Fidelity or equivalent policy covering losses from all crypto asset storage locations.

Tier 3 Crypto Custodians

In addition to Part I, a Tier 3 Crypto Custodian shall:

• be governed by legislation related to insolvency and the treatment of segregated assets, such that (1) the custody contract is enforceable in the crypto custodian's jurisdiction, and (2) the legal environment in the crypto custodian's jurisdiction is such that assets segregated for customers are preserved from the estate of a bankrupt or insolvent crypto custodian
• be supervised by a regulator that (1) includes a department dedicated to the licensing of entities providing custody services and performs prudential oversight functions; and (2) has an acceptable bilateral regulatory information-sharing arrangement with the Corporation or with a Canadian provincial or territorial securities regulator, or with a Canadian federal prudential regulator, provided that such federal prudential regulator maintains a bilateral regulatory information-sharing arrangement with the Corporation or with a Canadian provincial or territorial securities regulator
• provide a SOC 2 or ISAE 3000 (Type 2) assurance report based on the Trust Service Criteria relevant to security and availability for each outsourced custody technology provider
• provide a SOC 2 or ISAE 3000 (Type 2) assurance report covering crypto-asset specific risks for proprietary technology
• represent that it engages an independent professional to perform penetration testing annually
• represent that it adheres to recognized frameworks for third party risk management and business continuity
• maintain insurance appropriate for its assets under administration, including a Fidelity or equivalent policy covering crypto assets in hot and warm storage and, unless covered by its Fidelity policy, Specie coverage for crypto assets in cold storage.

Tier 4 Crypto Custodians

In addition to Part I, a Tier 4 Crypto Custodian shall:

• be governed by legislation related to insolvency and the treatment of segregated assets, such that (1) the custody contract is enforceable in the crypto custodian's jurisdiction; and (2) the legal environment in the crypto custodian's jurisdiction is such that assets segregated for customers are preserved from the estate of a bankrupt or insolvent crypto custodian
• represent that it engages an independent professional perform penetration testing annually
• maintain insurance appropriate for its assets under administration, including a Fidelity or equivalent policy, covering crypto assets in hot and warm storage and, unless covered by its Fidelity policy, Specie coverage for crypto assets in cold storage.

Schedule B - Custody Limits for Approved Crypto Custody Locations

Schedule C - Tokenized Asset Custodian Eligibility Framework

An Acceptable Tokenized Asset Custodian shall:

1. qualify as an Acceptable Securities Location under IDPC Rule 4342 and the General Notes and Definitions to IDPC Form 1
2. represent that it maintains policies and procedures describing its methods and practices for securing tokenized assets
3. provide a SOC 2 or ISAE 3000 (Type 2) report covering all elements of the technology infrastructure and based on the Trust Service Criteria relevant to Security, Availability, Confidentiality, and Processing Integrity
4. enter into a written custody agreement with the Dealer Member, that is enforceable in the tokenized asset custodian's jurisdiction, that, at a minimum, establishes:
   1. the role of the tokenized asset custodian as fiduciary for the Dealer Member;
   2. the standard of care, such that the tokenized asset custodian shall be liable for losses arising from its negligence, fraud, or willful misconduct;
   3. the tokenized asset custodian's liability for failures in technology that are reasonably within its control;
   4. the tokenized asset custodian's obligation to provide the Dealer Member with audited financial statements at least annually and SOC 2 reports at least annually, each within 90 days of the applicable reporting period-end; and
   5. the tokenized asset custodian's obligations with respect to sub-custodians, including:
      1. to identify proposed sub-custodians and obtain the Dealer Member's prior written consent before transferring tokenized assets held for the Dealer Member to a sub-custodian; and
      2. to provide the Dealer Member with ongoing disclosure of the assets held by each sub-custodian
5. maintain insurance appropriate for its assets under administration, including a Fidelity or equivalent policy covering losses from all tokenized asset storage locations
6. at the Corporation's direction, comply with additional digital custody requirements where the Corporation determines, based on the nature, scale, complexity, or risk profile of the tokenized asset, custody arrangement, or the custodian itself, that additional safeguards are warranted, provided that such additional requirements shall not exceed the digital custody requirements applicable to Tier 2 Crypto Custodians.

Appendix C – Terms and Conditions Relating to Staking Services

Scope

1. Unless CIRO has provided its prior written consent, the Dealer Member will offer clients the Staking Services only for:

1. Crypto Assets of blockchains that use a proof of stake consensus mechanism; and
2. the staked Crypto Assets that are used to guarantee the legitimacy of new transactions the validator adds to the blockchain.

Dealer Member proficiency

2. The Dealer Member will ensure that its Approved Persons are proficient and knowledgeable about staking Crypto Assets.

Validator due diligence and monitoring

3. The Dealer Member will not, without the prior written consent of CIRO:

1. act as a validator; or
2. contract with a staking services provider under terms requiring the Dealer Member to authorize the delegation of validator keys.

4. Before engaging a validator, the Dealer member will conduct due diligence on the validator, with consideration of, but not limited to:

1. the persons or entities that manage and direct the operations of the validator,
2. the validator’s reputation and use by others,
3. the amount of Crypto Assets the validator has staked on its own nodes,
4. the measures in place by the validator to operate the nodes securely and reliably,
5. the financial status of the validator,
6. the performance history of the validator, including but not limited to the amount of downtime of the validator, past history of “double signing” and “double attestation/voting,”
7. any losses of Crypto Assets related to the validator’s actions or inactions, including losses resulting from slashing, jailing or other penalties incurred by the validator, and
8. any guarantees offered by the validator against losses including losses resulting from slashing or other penalties and any insurance obtained by the validator that may cover this risk.

5. Before engaging a custodian to provide staking services, the Dealer Member will conduct due diligence on how the custodian provides the staking services and selects the validators.

6. The Dealer Member will monitor its validators for downtime, jailing and slashing events and take any appropriate action to protect Crypto Assets staked by clients.

Account appropriateness assessment

7. The Dealer Member has updated its product due diligence policies and procedures to review the Crypto Assets made available to clients for staking and staking protocols related to those Crypto Assets prior to offering those Crypto Assets as part of the Staking Services. The Dealer Member’s review will include, at a minimum, the following:

1. the Crypto Assets that the Dealer Member proposes to offer for staking;
2. the operation of the proof-of-stake blockchain for the Crypto Assets that the Dealer Member proposes to offer for staking;
3. the staking protocols for the Crypto Assets that the Dealer Member proposes to offer for staking;
4. the risks of loss of the staked Crypto Assets, including from software bugs and hacks of the protocol; and
5. the validators engaged by the Dealer Member or the Dealer Member’s custodian.

8. The Dealer Member has updated its policies and procedures to conduct a staking appropriateness assessment for a client before making the Staking Services available to that client.

9. The Dealer Member will apply the updated account appropriateness policies and procedures to evaluate whether offering the Staking Services is appropriate for a client before providing access to an account that makes available the Staking Services and, on an ongoing basis, at least once in each 12-month period.

10. If, after completion of an account-level appropriateness assessment, the Dealer Member determines that providing the Staking Services is not appropriate for the client, the Dealer Member will notify the client that this is the case, and the Dealer Member will not make available the Staking Services to the client.

11. The Dealer Member will only stake the Crypto Assets of those clients who have agreed to the Staking Services and have allocated Crypto Assets to be staked. Where a client no longer wishes to stake all or a portion of the allocated Crypto Assets, subject to any Lock-Up Periods (as defined below) or any terms of the Staking Services that permit the client to remove Crypto Assets from the Staking Services prior to the expiry of any Lock-Up Periods, the Dealer Member will cease to stake those Crypto Assets.

12. As required under IDPC Rule 3300 and CIRO Notice GN-3300-21-001, the Dealer Member must keep records that document the product due diligence reviews conducted.

Disclosure

13. Before the first time a client allocates any Crypto Assets to be staked, the Dealer Member will deliver to the client a statement describing those risks with respect to staking and the Staking Services described in Paragraph 14 below (the Risk Statement) and will require the client to provide electronic acknowledgement of having received, read and understood the Risk Statement.

14. The Dealer Member will clearly explain in the Risk Statement the risks with respect to staking and the Staking Services in plain language, which will include, at a minimum:

1. the details of the Staking Services and the role of all third parties involved;
2. the due diligence performed by the Dealer Member with respect to the proof-of-stake consensus protocol for each Crypto Asset for which the Dealer Member provides the Staking Services;
3. the details of the validators that will be used for the Staking Services and the due diligence performed by the Dealer Member with respect to the validators and their ongoing performance;
4. the details of whether and how the custody of staked Crypto Assets differs from Crypto Assets held on behalf of the Dealer Member’s clients that are not engaged in staking;
5. the general risks related to staking and any risks arising from the arrangements used by the Dealer Member to offer the Staking Services (e.g., reliance on third parties; risk of loss due to technical errors or bugs in the protocol; hacks or theft from the Crypto Assets being held in hot wallets, etc.) and how any losses will be allocated to clients;
6. whether any of the staked Crypto Assets are subject to any lock-up, unbonding, unstaking, or similar periods imposed by the Crypto Asset protocol, custodian or validator, where such Crypto Assets will not be accessible to the client or will be accessible only after payment of additional fees or penalties or forfeiture of any rewards (Lock-up Periods); and
7. how rewards are calculated on the staked Crypto Assets, including any fees charged by the Dealer Member or any third party, how rewards are paid out to clients, and any associated risks.

15. Immediately before each time that a client allocates Crypto Assets to be staked under the Staking Services, the Dealer Member will require the client to acknowledge the risks of staking Crypto Assets as may be applicable to the particular Staking Services or each particular Crypto Asset, including, but not limited to:

1. that the staked Crypto Assets may be subject to a Lock-up Period and, consequently, the client may not be able to sell or withdraw their Crypto Assets for a predetermined or unknown period of time, with details of any known period, if applicable
2. that given the volatility of Crypto Assets, the value of a client’s staked Crypto Assets when they are able to sell or withdraw, combined with the value of any Crypto Assets earned through staking, may be significantly less than their current value
3. how rewards will be calculated and paid out to clients and any risks inherent in the calculation and payout of any rewards
4. unless the Dealer Member has clearly indicated the reward yield is fixed and unconditional, that there is no guarantee that the client will receive any rewards on the staked Crypto Assets, and that past rewards are not indicative of expected future rewards
5. whether rewards may be changed at the discretion of the Dealer Member
6. that the client may lose all or a portion of the client’s staked Crypto Assets if the validator does not perform as required by the network
7. that additional risks can be found in the Risk Statement and the statement where the Dealer Member has described the Crypto Asset and its risks (the Crypto Asset Statement), including the names and other information regarding the validators and information regarding Lock- up Periods and rewards, with a link to the Risk Statement and Crypto Asset Statement.

16. Immediately before each time a client buys or deposits Crypto Assets that will be automatically staked pursuant to an existing agreement by the client to the Staking Services, the Dealer Member will provide prominent disclosure to the client that the Crypto Assets it is about to buy, or deposit will be automatically staked.

17. The Dealer Member will promptly update the Risk Statement and each Crypto Asset Statement to reflect any material changes to the disclosure or include any material risks that may develop with respect to the Staking Services and/or Crypto Assets.

18. In the event of any update to the Risk Statement, for each existing client that has agreed to the Staking Services, the Dealer Member will promptly notify the client of the update and deliver to them a copy of the updated Risk Statement.

19. In the event of any update to a Crypto Asset Statement, for each existing client that has agreed to the Staking Services in respect of the Crypto Asset for which the Crypto Asset Statement was updated, the Dealer Member will promptly notify the client of the update and deliver to the client a copy of the updated Crypto Asset Statement.

Custody of staked Crypto Assets

20. The Dealer Member or its custodians will remain in possession, custody and control of the staked Crypto Assets at all times.

21. The Dealer Member will establish and maintain policies and procedures that manage and mitigate custodial risks for staked Crypto Assets, including but not limited to an effective system of controls and supervision to safeguard the staked Crypto Assets. Where the Dealer Member contracts with a staking services provider as contemplated under Paragraph 3(b), such controls will include:

2. Review and evaluation, before approval and at least annually thereafter:
   1. the staking service provider’s audited financial statements prepared by a qualified independent auditor
   2. the staking service provider’s business continuity and disaster recovery plans
   3. assurance reports prepared by a qualified independent auditor attesting to the staking service provider’s internal controls
   4. results of penetration testing performed on the staking service provider’s information technology systems; and
3. procedures to terminate the delegation and ensure it retains control of the Crypto Assets as required under paragraph 20.

Segregation

22. The Dealer Member will hold the staked Crypto Assets for its clients in one or more omnibus Locations in the name of the Dealer Member separate and distinct from (i) the assets of the Dealer Member; and (ii) the Crypto Assets held for its clients that have not agreed to staking those specific Crypto Assets. A Location1is an address or wallet (or group of addresses or wallets) that is (are) subject to a distinct pre-set governance policy within the private key management solution employed by the Dealer Member or its custodian. For greater certainty, the Dealer Member (or its custodian) will not stake customer Crypto Assets from the same Location in which it holds unstaked customer Crypto Assets.

23. Notwithstanding Paragraph 22, a Dealer Member may maintain a residual proprietary interest in the Locations holding customer staked Crypto Assets:

1. to meet minimum quantity requirements established by a proof of stake network
2. to maintain preferential validator selection criteria while managing turnover in customer staked positions, where this portion of the residual proprietary interest corresponds with historical turnover.
3. to the extent that such Locations temporarily hold fees payable to the Dealer Member from staking rewards received for clients.

24. The Dealer Member will establish and apply procedures:

1. to segregate customers Crypto Assets promptly upon acquisition, unless subject to prior instructions by the customer to stake them
2. to, at least daily, detect, report, and correct deficiencies in all Locations holding customers’ Crypto Assets.

25. If the Dealer Member permits clients to remove Crypto Assets from the Staking Services prior to the expiry of any Lock-up Period,

1. the Dealer Member will extend this permission only on a best-efforts basis, and this condition must be expressly disclosed to and acknowledged by the client
2. the Dealer Member will establish and apply appropriate liquidity management policies and procedures to fulfill segregation and delivery obligations arising from such requests from the Dealer Member’s inventory.
3. The Dealer Member acknowledges that it holds Crypto Assets in trust for its clients and will not use the Crypto Assets of its clients for fulfilling delivery obligations arising from such requests. The Dealer Member will establish and maintain internal controls to:
   1. promptly segregate positions from its inventory equal to the amount the Dealer Member has permitted to be unstaked; and
   2. prevent the Dealer Member from using client assets to settle delivery obligations related to positions it has permitted to be unstaked.

Guarantees

26. The Dealer Member will not provide any guarantee related to the risks of staking services.

Rewards, fees, and losses

27. The Dealer Member has established, and will maintain and apply, policies and procedures to address how staking rewards, fees and losses will be calculated and allocated to clients that have staked Crypto Assets.

28. Where the Dealer Member offers a fixed and unconditional reward, its policies and procedures must include those to accrue for reward obligations and maintain sufficient inventory to offset reward obligations at the time of accrual.

29. The Dealer Member will regularly and promptly determine the amount of staking rewards earned by each client that has staked Crypto Assets under the Staking Services and distribute each client’s staking rewards to the client promptly after they are made available to the Dealer Member.

30. The Dealer Member will estimate the rewards it has earned on behalf of its customers’ and proprietary positions in Crypto Assets, compare the estimate to rewards received, investigate significant discrepancies, and take appropriate corresponding actions.

31. The Dealer Member will clearly disclose the fees charged by the Dealer Member for the Staking Services and provide a clear calculation of the rewards earned by each client that agrees to the Staking Services.

32. The Member will engage its auditor to perform procedures, satisfactory to CIRO, designed to verify that the Member maintains books and records reflecting:

4. rewards earned from all proof of stake networks on which it participates in staking
5. the allocation of rewards to customers and the Dealer Member in a manner that is consistent with the Dealer Member’s policies and procedures.

Staking Services reporting

33. The Dealer Member will provide certain reporting in respect of the preceding calendar quarter to CIRO and its Principal Regulator within 30 days of the end of March, June, September and December in connection with the Staking Services, including, but not limited to:

1. the total number of clients to which the Dealer Member provides the Staking Services;
2. the Crypto Assets for which the Staking Services are offered;
3. for each Crypto Asset that may be staked:
   1. the amount of Crypto Assets staked
   2. the amount of each such Crypto Assets staked that is subject to a Lock-up Period and the length of the Lock-up Period
   3. the amount of Crypto Assets that clients have requested to unstake
   4. the amount of rewards earned by the Dealer Member and the clients for the Crypto Assets staked under the Staking Services;
4. the names of any third parties used to conduct the Staking Services;
5. any instance of slashing, jailing or other penalties being imposed for validator error and the details of why these penalties were imposed;
6. any reporting regarding the Dealer Member’s liquidity management as requested by the Principal Regulator; and
7. the value, at the end of each period, of the Dealer Member’s residual proprietary interest in segregated staked Locations for each Crypto Asset staked.

These terms and conditions may be amended upon prior written notice to the Dealer Member.

Appendix D – Other Terms and Conditions

Trading Information

1. Newton at its cost, shall be responsible for providing CIRO, in the form and format specified by CIRO, with (i) access to information relating to trades executed utilizing Newton trading platform and (ii) any other information reasonably required by CIRO to effectively monitor the conduct of trading.

2. At CIRO's request, Newton shall, at Newton's cost, provide CIRO with historic trade information and trading related activity on Newton trading platform. Such information shall be provided in such form and in such format as CIRO requests and within such time periods as CIRO shall reasonably direct.

Liquidity Providers

3. Newton will take reasonable steps to verify, before using a Liquidity Provider, that the Liquidity Provider is appropriately registered and/or licensed to trade in crypto assets in their home jurisdiction or that their activities do not require registration in their home jurisdiction and that they are not in default of securities legislation in Canada.

4. If Newton becomes aware that a Liquidity Provider is not appropriately registered or licensed to trade in crypto assets in their home jurisdiction as required or that the Liquidity Provider is in default of securities legislation in any jurisdiction in Canada, Newton will seek approval from CIRO to continue use of the Liquidity Provider, or, failing that approval, will follow established policies and procedures to promptly cease trading of any crypto assets with the Liquidity Provider except to allow clients to liquidate their positions.

Accounting Treatments

5. Newton will apply the following accounting policies to the extent that Newton or its Panel Auditor believes either that any one of them does not comply with IFRS, or that IFRS allows Newton an alternative accounting choice:

1. Newton to account for clients’ crypto asset holdings off-balance sheet.
2. Newton to record gains and losses on proprietary trading in crypto assets on a net basis on Statement E.
3. Newton to account for long-term proprietary positions in crypto assets as inventory.

Training for Approved Persons

6. Newton will provide training, as represented to CIRO, to all Approved Persons, including Executives, Investment Representatives and Supervisors, as well as compliance staff, upon approval of the application for membership in order to ensure ongoing compliance with training and proficiency requirements in IDPC Rules 2602 and 2604(1).

7. Newton will provide CIRO staff with notice of any substantive changes to its internal training plan including detailed analysis and explanation of the change, no later than 30 days in advance of the change.