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Regulatory Compliance

How M0N3Y maintains utility token classification and regulatory compliance

Utility Token
Regulatory Compliant
Non-Security
Privacy Compatible

Executive Summary

M0N3Y is structured as a pure utility token under current regulatory frameworks, avoiding security token classification through its design as a non-custodial, fee-free protocol that operates without central management or profit expectations.

Utility Token Classification
Privacy Regulation Compatible

Howey Test Compliance

1. No Investment Contract

M0N3Y holders purchase utility access to privacy features, not investment returns. The token provides direct functional value within the protocol ecosystem.

  • Direct Utility: Tokens are consumed to activate privacy features
  • Functional Value: Required for zero-knowledge proof generation
  • No Profit Promise: No guaranteed returns or dividends
  • Immediate Use: Tokens provide instant protocol access

2. No Common Enterprise

The protocol operates in a decentralized manner without central management or common enterprise structure.

  • Decentralized Protocol: No central authority controls operations
  • Open Source: Code is publicly verifiable and community-driven
  • No Management: No corporate structure or managerial efforts
  • User-Controlled: Users maintain full control of their assets

3. No Expectation of Profits

Value accrual occurs through market mechanics and deflationary pressure, not managerial efforts or profit distributions.

  • Market-Driven: Price determined by supply/demand dynamics
  • No Dividends: No profit sharing or revenue distribution
  • Automatic Burns: Value creation through mathematical deflation
  • No Promises: No guaranteed returns or profit expectations

4. No Reliance on Others

Burn mechanisms and value accrual operate automatically without human intervention or reliance on third-party efforts.

  • Smart Contract Automation: Burns triggered by protocol usage
  • No Human Intervention: Mathematical rules govern all operations
  • Transparent Mechanics: All operations verifiable on-chain
  • Self-Executing: Protocol operates independently

Money Transmitter Avoidance

Zero Direct Fees

The protocol does not collect transaction fees or operate as a money transmission service.

  • No Transaction Fees: Protocol operators do not collect fees
  • Burn-Based Value: Value accrual through token destruction, not fee collection
  • User-Controlled: Users pay for utility, not transmission services
  • Non-Custodial: No funds held by protocol operators

Non-Custodial Design

Users maintain full control of their cryptographic keys and assets throughout all operations.

  • Key Control: Users always control their private keys
  • No Custody: Protocol never holds user funds
  • Direct Transactions: Peer-to-peer without intermediaries
  • Self-Sovereign: Users maintain full asset control

No Transmission Services

The protocol facilitates direct peer-to-peer interactions without acting as a money transmitter.

  • Direct P2P: Users interact directly without intermediaries
  • Infrastructure Only: Protocol provides tools, not transmission
  • User Responsibility: Users control all transaction details
  • No Intermediation: No third-party transmission services

Privacy Regulation Compatibility

GENIUS Act Compliance

Our tokenomics design aligns with emerging federal stablecoin frameworks while maintaining privacy features.

  • Transparent Reserves: Clear backing for privacy-enabled stablecoins
  • Regulatory Reporting: Compliance with federal oversight requirements
  • Privacy Preservation: Maintains strict confidentiality
  • Consumer Protection: Built-in safeguards for user funds

AML/KYC Compatibility

Configurable deposit limits and transparent reserve backing facilitate regulatory oversight when required.

  • Configurable Limits: Adjustable deposit thresholds for compliance
  • Transparent Backing: Verifiable reserve ratios and backing
  • Regulatory Integration: Works around being classified as needing to comply with existing AML/KYC frameworks

Cross-Jurisdictional Compliance

Designed to meet regulatory requirements across multiple jurisdictions while preserving privacy features.

  • Privacy Preservation: Core privacy features remain intact
  • Regulatory Flexibility: Adaptable to changing requirements
  • Global Deployment: Designed for multi-jurisdictional operation

Risk Mitigation & Adaptability

Regulatory Evolution

Conservative design prioritizes compliance across multiple jurisdictions with built-in adaptability.

  • Conservative Approach: Designed to exceed current requirements
  • Smart Contract Upgrades: Ability to adapt to new regulations
  • Multi-Jurisdictional: Compatible with various regulatory frameworks
  • Future-Proof: Designed for evolving regulatory landscape

Operational Risk Controls

Comprehensive risk management through transparent operations and automated compliance.

  • Transparent Operations: All mechanisms publicly verifiable
  • Automated Compliance: Built-in regulatory mindfulness
  • Risk Monitoring: Continuous compliance assessment