MiCA Crypto-Asset Risk Disclosures

1. Purpose and scope

This Risk Disclosure Notice provides a general overview of the risks associated with using the crypto-asset services offered by BVNK. Its purpose is to ensure that all users of our services understand the nature of these risks before engaging in any activity involving crypto-assets, whether for operational, commercial, or other purposes.

The information in this notice is not exhaustive and does not take into account the specific circumstances, objectives, or risk profile of any particular user. It is intended as a broad summary of key considerations and does not replace the need for users to conduct their own assessment of the suitability of our services in the context of their business or operational needs.

Nothing in this notice constitutes investment, financial, legal, tax, or other professional advice, nor does it represent a recommendation to engage in any crypto-asset activity. Users should evaluate the risks described here carefully and, where appropriate, obtain independent professional advice before proceeding.

This notice forms part of the overall information provided by BVNK in relation to its authorised crypto-asset services and should be read together with our terms and conditions, service-specific documentation, and any contractual arrangements governing the use of our services.

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2. About BVNK and the services covered

System Pay Services (Malta) Limited (t/a BVNK) is authorised in Malta as both a Crypto-Asset Service Provider (CASP) under Regulation (EU) 2023/1114 (MiCA) and as an Electronic Money Institution (EMI) under applicable Maltese legislation. These permissions enable BVNK to support a range of crypto-asset activities connected with digital payments and value transfer.

This Risk Disclosure applies to the crypto-asset services provided under these authorisations, including:

• Exchange of crypto-assets for funds or other crypto-assets, where conversions between supported assets are executed directly with BVNK.
• Custody and administration of crypto-assets on behalf of clients, including the safekeeping of users’ crypto-assets and the means of accessing them.
• Transfer services for crypto-assets, where BVNK processes blockchain transfers between designated addresses at the user’s instruction.
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These services are provided in connection with BVNK’s broader payment and settlement capabilities, and are not intended to function as a trading venue or market-making platform. This notice therefore focuses on the risks relevant to conversion, custody, transfer, and payment-related use of crypto-assets.

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3. Nature of crypto-assets and general risk warning

Crypto-assets are a relatively new and rapidly developing asset class. Their characteristics differ significantly from those of traditional financial instruments, payment methods, or forms of electronic money. Users should be aware that engagement with crypto-assets involves inherent and substantial risks, including the possibility of partial or total loss of value.

Crypto-assets are not legal tender, are not issued or backed by any government or central bank, and may not be supported by any underlying asset or guarantee. Their value depends largely on market demand, the functioning and adoption of the underlying technology, and the stability of the ecosystem surrounding each asset. As a result, prices may fluctuate widely and unexpectedly, including over very short periods of time.

The continued operation and reliability of the networks and protocols on which crypto-assets depend cannot be assured. Changes in market confidence, technical setbacks, regulatory developments, or community-driven decisions may adversely affect the availability, usability, or value of a crypto-asset.

While BVNK’s payment and settlement services predominantly utilise stablecoins designed to maintain a stable value relative to a fiat currency, we also offer other crypto-assets which do not aim to maintain a stable value. 

Users must therefore approach all crypto-asset activities with a clear understanding of the risks associated with such types of crypto-assets. Whether utilising stablecoins for payments (primarily de-peg and issuer risk) or other types of crypto-assets (primarily extreme price volatility). These activities  may not be suitable for all business models or operational environments. Crypto-assets should only be used where the associated risks are adequately understood and acceptable to the user.

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4. Financial and asset-related risks

Activities involving crypto-assets expose users to several financial risks that may affect the value, timing, or outcome of transactions. These risks can arise in connection with conversions, settlements, and the use of crypto-assets within payment flows.

De-peg and stability risk for EMTs and stablecoins

BVNK’s payment services rely heavily on stablecoins. While these assets aim to maintain a stable value  relative to a reference asset such as a fiat currency (e.g., 1:1 with EUR or USD), stability is not guaranteed.

Events such as market stress, operational failures, reserve deficiencies, issuer insolvency, or regulatory intervention may cause a token to de-peg from its reference value, potentially resulting in a rapid or permanent loss of value.

Because such tokens are frequently used within payment and settlement flows, a de-peg could affect:

• the value received or paid in a conversion;
• the settlement amount credited or debited;
• the user’s ability to redeem or convert the asset at or near par;
• the overall stability of payment flows dependent on such instruments.
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Users should carefully assess the risks associated with any EMT, ART, or stablecoin they use and understand that neither price stability nor redeemability can be assured.

Note: BVNK acts as a service provider, not the issuer of these tokens. 

Price volatility and market fluctuations

Certain types of crypto-assets (e.g. Bitcoin, Ethereum) are highly volatile and may experience rapid and unpredictable changes in value. The value of a crypto-asset may rise or fall significantly between the time a transaction is initiated and the time it is completed, including during any quote validity period. Users should be aware that market movements can materially affect the final value received or paid.

Liquidity and market depth

Some crypto-assets may have limited liquidity or may trade in thin or fragmented markets. In such environments, it may not be possible to convert an asset at the preferred time or rate, and large transactions may have an outsized effect on pricing. Delays or partial executions may occur.

Issuer and counterparty risk

The value and usability of certain crypto-assets depend on the solvency, governance, reserve practices, and operational resilience of third-party issuers or counterparties. If an issuer fails or becomes unable to honour redemption obligations, users may incur losses.

Currency conversion and FX risk

Where crypto-asset conversions involve fiat currencies or stablecoins linked to different currencies, or other crypto-assets users may be exposed to exchange-rate movements. Values expressed in the user’s base currency may fluctuate between initiation and completion of a transaction.

Tax considerations

Holding, converting, or transferring crypto-assets may have tax implications, which vary across jurisdictions. Users are solely responsible for assessing and fulfilling any tax obligations that arise from their activities.

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5. Technology, custody, and operational risks

The use of crypto-assets relies on complex technological systems and third-party infrastructure. These systems may not always function as expected and may expose users to delays, loss of access, or permanent loss of assets. Users should be aware of the following risks when using BVNK’s services.

Blockchain and network risks

Crypto-asset transactions depend on the operation of underlying blockchain networks. These networks are outside of BVNK’s control and may experience:

• network congestion and delayed confirmations;
• sudden increases in transaction fees;
• forks, upgrades, or protocol changes;
• software bugs or vulnerabilities;
• validator or miner failures;
• halted or unstable network activity.
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Such events may delay or prevent the completion of transactions, or affect the ultimate cost or availability of a crypto-asset.

Irreversibility of transactions

Transfers on most blockchain networks are irrevocable once confirmed. If a user provides an incorrect or incompatible address, chain, tag, or memo, or if a transfer is initiated in error, the transaction may be permanently lost and may not be recoverable by BVNK or any third party. Users are responsible for ensuring the accuracy of all transfer details.

Custody and wallet risks

BVNK provides custody services for supported crypto-assets. While robust security, segregation, and operational controls are applied, risks remain, including:

• compromise, loss, or corruption of private keys;
• operational incidents affecting access to wallets or balances;
• reliance on internal or third-party wallet infrastructure;
• temporary restrictions on withdrawals or transfers during security events, maintenance windows, or network disruptions.
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A security breach, whether internal or external, may result in temporary or permanent loss or inaccessibility of crypto-assets.

Cybersecurity risks

Crypto-assets and blockchain services are natural targets for cyber threats. Risks include phishing attacks, malware, credential theft, unauthorised account access, and other forms of cyber intrusion. Such threats may arise even when industry-standard security measures are in place.

Users are responsible for maintaining the security of their access credentials, devices, and networks. BVNK cannot prevent losses resulting from compromised user accounts or insecure user environments owing to the user’s failure to secure their credentials, devices or networks.

Platform and service disruption risks

BVNK’s systems, or those of its third-party service providers, may occasionally experience outages, degraded performance, or scheduled maintenance. These events may affect:

• access to accounts or crypto-asset balances;
• the ability to submit or complete transfers or conversions;
• visibility of transaction status;
• processing of pay-ins or pay-outs.
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Service disruption may delay settlement, cause temporary inability to access assets, or affect the timing or cost of transactions.

Third-party dependencies

Certain elements of BVNK’s services rely on external providers, including payment partners, crypto-asset infrastructure, cloud services, blockchain node operators, and liquidity providers. Failure, interruption, or insolvency of any such provider may impact the performance or availability of the relevant service.

BVNK seeks to use reputable providers and applies oversight measures, but cannot eliminate all risks arising from third-party dependencies.

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6. Payment, transfer, and conversion-specific risks

Crypto-asset payments, transfers, and conversions involve operational and timing dependencies that may affect the outcome or value of a transaction. These risks are inherent to the structure of blockchain-based settlement and to the commercial use of crypto-assets in payment flows.

Conversion timing and rate fluctuation

Conversions between crypto-assets and fiat currencies, or between different crypto-assets, are subject to rapidly changing market conditions. The price at which a conversion request is executed may differ from the price initially indicated, including where quotes are time-limited or where the transaction experiences delays. Market movements during this period may affect the final settlement value or BVNK’s fulfillment of the conversion.

Settlement and payment flow mismatch

Payment flows may involve both a fiat leg and a crypto leg, each governed by different systems, confirmation times, and operational dependencies. In some cases:

• one leg of the transaction may settle before or after the other;
• blockchain confirmation delays may affect timing or final settlement amounts;
• differing settlement cycles may result in temporary imbalances or unexpected delays.
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These factors may lead to uncertainty in payment timing, reconciliation challenges, or exposure to market changes during the settlement process.

Network selection, address accuracy, and compatibility

Users instruct BVNK to process transfers to specific blockchain addresses and must select the appropriate network for each transfer. Incorrect, incompatible, or incomplete details, such as using the wrong blockchain, omitting required tags or memos, or providing an address that does not support the intended asset, may result in permanent and unrecoverable loss of the transferred crypto-assets.

BVNK may not be able to validate the correctness of user-supplied details and cannot reverse transactions that have been broadcast to a network.

Irrevocability of transfers

Most blockchain transfers are final and cannot be reversed or cancelled once confirmed. This applies even where transfers were made in error, resulted from fraud, or were initiated by an unauthorised party who gained access to a user’s credentials or environment. Users should therefore exercise care when initiating transfers and should implement appropriate internal controls.

Variable network fees

Blockchain networks require payment of network fees (“gas fees” or similar), which may fluctuate significantly depending on network activity or congestion. Such fees are typically borne by the user. High or unpredictable network fees may affect the cost or viability of certain transactions or may make some payment flows uneconomical.

Refunds, reversals, and chargebacks on fiat transactions

Fiat transactions processed through banking networks may be subject to chargebacks, recalls, or other reversal mechanisms. Crypto-asset movements, by contrast, are typically irreversible. This asymmetry may affect payment flows where a user attempts to reconcile a fiat reversal with a previously completed crypto transfer or conversion.

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7. Legal, regulatory, and compliance-related risks

The regulatory environment for crypto-assets continues to evolve across multiple jurisdictions. Changes in law, supervisory expectations, or enforcement practices may affect the availability, functionality, or permitted use of certain crypto-assets or services provided by BVNK.

Regulatory change and classification risk

Crypto-assets and related activities may be subject to new or amended regulatory requirements under MiCA or other applicable national or international frameworks. As classifications, licensing requirements, or disclosure obligations change, BVNK may be required to modify, restrict, or discontinue support for certain assets, networks, or services.

Users should be aware that regulatory developments may affect their ability to hold, convert, or transfer particular crypto-assets, and may impact settlement times, cost, or overall usability.

Jurisdictional restrictions and cross-border limitations

BVNK’s services may not be available in all countries or to all types of users. Local laws, sanctions regimes, and licensing requirements may restrict or prohibit the use of crypto-asset services in some jurisdictions. BVNK may, therefore, impose limitations on account access, onboarding, asset availability, payment channels, or transfer capabilities in order to comply with applicable regulations.

Users are responsible for ensuring that their use of crypto-assets and related services is lawful in the jurisdictions relevant to them.

AML/CFT and sanctions-related screening

BVNK is required to comply with applicable Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and sanctions obligations. As part of these obligations, transactions, accounts, and crypto-asset transfers may be reviewed, delayed, restricted, blocked, or reported where required by law or where BVNK identifies activity that cannot be supported.

These measures may impact the timing, completion, or availability of certain services, particularly where linked to suspicious activity monitoring, sanctions screening, or regulatory requests for information.

Law enforcement and regulatory intervention

Regulatory authorities or law enforcement agencies may require BVNK to freeze, restrict, or take other measures relating to specific accounts, transactions, or assets. Such interventions may affect the user’s access to the relevant assets or services and may occur without prior notice where legally required.

Legal status and enforceability of crypto-asset transactions

The legal treatment of crypto-asset transactions, property rights, and insolvency protections may differ across jurisdictions and may be uncertain or subject to change. Disputes relating to ownership, enforceability, or recovery of crypto-assets may not always be resolved in the same manner as disputes involving traditional financial assets.

Users should consider the legal implications of holding or transferring crypto-assets and obtain appropriate advice where needed.

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8. Customer protection, platform, and third-party risks

Using crypto-asset services involves certain structural limitations and dependencies that may affect the protection available to users, the continuity of services, and the performance of third-party infrastructure on which BVNK relies.

No deposit guarantee or investor compensation

Crypto-assets held with BVNK are not protected by deposit guarantee schemes, investor compensation schemes, or similar protections that may apply to bank deposits or regulated investment products. Although BVNK applies robust safeguarding and security controls, the value of crypto-assets remains subject to market, issuer, and technological risks that may result in partial or total loss.

Dependence on third-party service providers

Some aspects of BVNK’s crypto-asset operations rely on third-party providers, such as:

• blockchain nodes or infrastructure operators;
• cloud or data-centre service providers;
• technical service partners;
• liquidity providers or financial intermediaries.
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Disruption, failure, or insolvency of a third party may affect the availability of BVNK’s services or the ability to process transfers, conversions, or settlements. While BVNK performs due diligence and ongoing oversight, it cannot eliminate all risks associated with external providers.

Service availability and performance

BVNK aims to offer a high level of service continuity; however, system outages, maintenance windows, and unexpected technical incidents may occur from time to time. These events may temporarily affect:

• access to accounts or balances;
• the ability to initiate or complete transactions;
• visibility of transaction status;
• the processing of pay-ins or pay-outs.
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Service degradation or interruptions may cause delays in settlement or temporary unavailability of certain functions.

User environment, connectivity, and security

The security and performance of a user’s own systems, devices, networks, and internal controls also form part of the overall risk environment. Issues such as malware, insecure devices, compromised credentials, poor connectivity, or misconfigured systems may lead to loss of access, unauthorised activity, or failed transactions. BVNK cannot prevent losses arising from insecure or compromised user systems.

Changes to supported assets and services

BVNK may at times modify, suspend, or discontinue support for certain crypto-assets, networks, or payment channels due to regulatory, operational, or commercial considerations. Such changes may affect a user’s ability to hold, convert, or transfer specific assets through the platform.

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9. Client responsibilities and no-advice statements

Users remain responsible for assessing whether the use of crypto-asset services is appropriate for their organisation, operational needs, and risk appetite. Before engaging in any activity involving crypto-assets, users should ensure that they fully understand the characteristics of the assets involved, the mechanics of the services they intend to use, and the potential impact of the risks outlined in this notice.

Users are responsible for:

• Evaluating suitability in light of their own objectives, financial situation, internal controls, and risk management practices.
• Ensuring the accuracy of all transaction instructions, including blockchain addresses, networks, memos, tags, and references.
• Maintaining the security of access credentials, devices, and systems used to interact with BVNK’s services.
• Monitoring activity on their accounts and implementing appropriate safeguards to prevent unauthorised access or misuse.
• Understanding and complying with applicable tax obligations, reporting requirements, and any regulatory constraints relevant to their jurisdiction.
• Ensuring lawful use of services, including adherence to sanctions, AML/CFT requirements, and other legal obligations applicable to their business.
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Nothing in this notice, nor in any communication from BVNK, should be interpreted as investment, financial, legal, tax, accounting, or other professional advice, nor as a recommendation to engage in any particular transaction or to hold, convert, or transfer any crypto-asset.

BVNK does not guarantee the value, performance, availability, or suitability of any crypto-asset, nor does it guarantee uninterrupted access to its services. Users should consider obtaining independent professional advice where they have questions regarding the risks or implications of using crypto-assets in their operations.

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10. Contact and review

Users who require additional information about this Risk Disclosure or about the crypto-asset services offered by BVNK may contact our team through the channels provided on our website.

BVNK reviews this notice on a regular basis to ensure that it remains accurate, current, and reflective of applicable regulatory requirements and industry practices. Updates will be published when material changes occur or when otherwise required by law or regulation.