Crypto Asset Statement Bitcoin

Last updated: May 25, 2023

No securities regulatory authority or regulator in Canada has assessed or endorsed bitcoin or any of the other Crypto Contracts or Crypto Assets made available through Shakepay Inc. (“Shakepay”) on the Shakepay Platform, including an opinion that Bitcoin itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your Crypto Assets, and such changes may be sudden and without notice.

Shakepay is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Shakepay Inc. dated May 25, 2023. The statutory rights of action for damages and the right of rescission in sections 217 and 221 of the Securities Act (Québec) and similar legislation in the other provinces and territories of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement or the Shakepay Risk Statement.

What is Bitcoin?

Bitcoin is the first digital asset (sometimes referred to as “virtual currency” or “cryptocurrency”) that started the blockchain revolution. Through a white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”, anonymous inventor, Satoshi Nakamoto, introduced bitcoin and the use of distributed ledgers to allow for financial transactions between parties without the need for any trusted intermediaries.

Bitcoin was first “mined” in 2009 and has seen tremendous growth in users and interest. The term “bitcoin” can refer to both the cryptocurrency and the underlying blockchain that runs the network. The supply of bitcoin is capped at 21 million and it is expected that the last bitcoin will be mined somewhere around 2140. The limited supply of bitcoin has become the main narrative for the bitcoin community in contrast to the inflationary growth of central bank-issued fiat currencies.

There is no central party behind bitcoin with miners, developers and users all coordinating to make changes and enhancements collectively.

Risks

Canada’s securities regulators require that we disclose to you certain information and make certain statements regarding digital assets.

We are required to inform you that digital assets (referred to more broadly as “Crypto Assets” by Canada’s securities regulators) are risky and come with unique characteristics. We encourage all clients to do their own research before purchasing or selling any digital asset including bitcoin.

No Canadian securities regulatory authority has expressed an official opinion on bitcoin including whether it is considered a security and/or a derivative.

Shakepay has conducted an assessment of bitcoin and like Canadian securities regulators, we do not express an opinion about whether it is a security and/or a derivative. Should bitcoin ever be legally deemed a security and/or a derivative, or due to other regulatory changes in Canada, Shakepay may be obligated to stop offering the Crypto Asset on our platform for some or all of our clients.

Shakepay’s due diligence considered the developer ecosystem, technical risks, legal/enforcement actions, timeline, market capitalization and liquidity of bitcoin. Our due diligence did not find any concerns based on the factors considered and we note that bitcoin is widely traded in regulated Canadian and international venues.

This Crypto Asset Statement does not include all risks associated with buying and selling bitcoin. Like an investment in other Crypto Assets, an investment in bitcoin includes the following general risks: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. You are encouraged to also review the Risk Statement for additional discussion of the general risks associated with what Canadian securities regulators term “Crypto Assets”. You must always conduct your own assessment and should not rely on this Crypto Asset Statement or the Risk Statement, which highlight only certain risks relating to bitcoin.

Shakepay is offering what securities regulators in Canada term “Crypto Contracts”, including bitcoin, under the “Prospectus Relief” exemption as contained in the exemptive relief decision dated May 25, 2023. Canadian securities regulators require us to inform you that “the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada do not apply to any misrepresentation in this Crypto Asset Statement”. Shakepay is unable to offer legal advice with respect to Canadian securities laws and does not express an opinion as to any remedies that may or may not be available to you.

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