Asset-specific risks

Kinesis Gold (KAU) – Risk Warning

Kinesis Gold (KAU) is a digital asset backed 1:1 by physical gold held in audited vaults. The price of Kinesis Gold (KAU) is linked to the price of gold, which may fluctuate. You should be prepared to lose part or all of your investment.

KAU is unregulated in the UK, and you will not be protected by the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS).

KAU does not provide guaranteed income or capital protection. Any potential returns depend on movements in the gold price and, where applicable, transactional activity within the Kinesis Monetary System.

Holding KAU involves operational and custody risks, including system failures, cyber-attacks, human error, or delays in transferring, redeeming, or accessing assets. While gold is held in third-party vaults, this introduces counterparty risk, including reliance on vaulting providers, auditors, and other service partners.

There may also be liquidity risk, meaning you may not always be able to sell or redeem KAU immediately or at your preferred price, particularly during periods of market stress or reduced platform activity.

You are responsible for assessing and meeting any tax obligations arising from holding, transferring, or using KAU.

Kinesis Silver (KAG) – Risk Warning

Kinesis Silver (KAG) is a digital asset backed 1:1 by physical silver held in audited vaults. The price of KAG is linked to the price of silver, which may fluctuate, and you could lose part or all of your investment.

KAG is unregulated in the UK, with no FSCS or Financial Ombudsman protection. It does not generate guaranteed income, and any returns depend on market price movements and transactional activity within the Kinesis Monetary System.

Holding KAG involves operational and custody risks, including system failures, cyber-attacks, human error, or delays in transferring, redeeming, or accessing assets. While gold is held in third-party vaults, this introduces counterparty risk, including reliance on vaulting providers, auditors, and other service partners.

There may also be liquidity risk, meaning you may not always be able to sell or redeem KAG immediately or at your preferred price, particularly during periods of market stress or reduced platform activity.

You are responsible for assessing and meeting any tax obligations arising from holding, transferring, or using KAG.

Kinesis Velocity Token (KVT) – Risk Warning

Kinesis Velocity Token (KVT) is a utility token within the Kinesis ecosystem that can be used to access the KVT Yield, which represents a proportional share of certain transaction fee revenues generated across the Kinesis Monetary System. Yield amounts depend on overall system usage and the number of KVTs held and may vary significantly over time.

KVT is highly volatile and speculative, and its value may change significantly over short periods. You should be prepared to lose all of the money you invest.

KVT is unregulated in the UK, and you will not be protected by the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS). 

Holding KVT involves governance and platform dependency risks, as changes to the Kinesis ecosystem, fee structures, token utility, or business operations could materially affect the value or functionality of KVT. Operational and custody risks include cyber-attacks, technical failures, or disruptions that may impact your ability to access, transfer, or use the token.

KVT may also be subject to liquidity risk, meaning there may be limited opportunities to sell KVT or realise value at a particular time or price.

You are responsible for any tax obligations arising from holding, transferring, or using KVT.

Asset categories’ specific risks

Please review the following risks, which may apply to certain categories of crypto assets listed on the Kinesis Exchange:

Asset Risk Category Description
Stablecoins:
Stablecoins aim to maintain a value to an underlying asset such as a fiat currency. However, they may still experience price fluctuations, and there is no guarantee that their value will remain pegged 1:1 to the reserve asset. Risks of stablecoins include: 		Issuer & Counterparty Risk Certain tokens may rely on assets held with third parties, which may or may not be verifiable or visible to the token holder. If those reserves are insufficient, inaccessible, mismanaged, or not independently verified, the token may lose value or become difficult to redeem. Legal recourse to any pledged assets may be limited.
Depeg / Redemption risk Stablecoins are designed to track the price of a reference currency, such as a fiat currency like pounds or dollars. In extreme market conditions, this link may not hold, which could cause the token’s price to move unexpectedly. Redemption of tokens may be delayed or unavailable.
Volatility risk Stablecoins aim to maintain a value close to a reference currency, but this is not guaranteed. Prices may fluctuate, and you could lose part or all of your investment.
Operational & custody risk Technical failures, cyber-attacks, or platform issues could prevent access to funds.
No guaranteed income Any returns from platforms are not inherent to the stablecoin and are not guaranteed.
DeFi tokens:
Decentralised Finance (“DeFi”) tokens are crypto assets built on decentralised blockchain technology for financial applications or protocols. Risks linked to DeFi tokens include: 		Enterprise Risk DeFi services often rely on multiple interconnected protocols. If one protocol experiences a failure, bug, or security breach, this can trigger wider problems across other connected platforms and may affect the value or usability of DeFi tokens.
Technology Risk DeFi platforms rely on smart contracts and external data sources (known as oracles). Errors, bugs, manipulation, or inaccurate data can cause contracts to behave unexpectedly, leading to loss of funds or disruption to services.
Regulatory Risk DeFi tokens are unregulated in many jurisdictions, including the UK. Governments or regulators may introduce new rules or restrictions, or ban certain activities altogether. This could limit access, reduce liquidity, or negatively affect the value of DeFi tokens.
Legal Risk Some DeFi platforms operate without user verification or oversight. This may result in users unknowingly interacting with restricted or sanctioned entities or accessing services that are not permitted in certain jurisdictions. Regulatory intervention could lead to platforms being restricted, suspended, or shut down, which may impact token value or liquidity.
Market Risk DeFi tokens often lack traditional valuation metrics. Prices are largely driven by market demand and sentiment, which may be volatile and subject to manipulation. As a result, token prices may rise or fall sharply with little warning.
Utility Tokens:
Utility tokens are designed to provide users with access to a product or service, typically within a blockchain ecosystem. Risks linked to Utility Tokens include: 		Speculative Value Although not intended as investment instruments, utility tokens are often traded on secondary markets. This can result in significant price volatility unrelated to the token’s utility.
Limited Functionality The token’s value and use case are restricted to a specific platform or ecosystem, which may not succeed or gain widespread adoption.
Dependence on Development Teams Utility tokens often rely on continued support and development by a specific team or company. If development is delayed, halted, or fails, the token’s utility and value may diminish.
Regulatory Uncertainty Regulatory treatment of utility tokens may vary across jurisdictions and could change over time, potentially affecting your ability to use or trade the token.
Lack of Redemption Rights Holding a utility token does not give the holder any ownership, voting, profit-sharing, or redemption rights in the underlying project or platform.
Meme Coins:
Meme Coins are digital assets whose value is driven by community sentiment and online trends. Risks linked to Meme coins include: 		Market Risk Digital asset markets are known for their extreme price volatility, with values often experiencing rapid and unpredictable fluctuations.
Market Sentiment Risk Digital asset prices can be heavily influenced by market sentiment, news, and social media. FUD (fear, uncertainty, doubt) and FOMO (fear of missing out) can drive unexpected price movements.
Market Manipulation Risk Meme coins often have limited trading activity and concentrated ownership. Large holders or coordinated groups may buy or sell significant amounts over a short period, causing sharp price movements that are not linked to underlying value.
Enterprise Risk There may be a lack of transparency when it comes to the build of certain tokens or no audits performed on the enterprise behind a given Meme coin. Collateral pools, assets or proof of reserves may be unverifiable. Audit statements could be unreliable.
Model of Operation Risk Cryptocurrencies may use intricate network or business models that are not fully comprehensible to token holders, resulting in misinformed decisions.
Transparency Risk Meme coins may be controlled or strongly influenced by a small group of people, who may be anonymous. Decisions, disputes, or changes made by these groups, such as creating new tokens or altering how the project operates, can reduce the value of existing tokens.
Governance Tokens:
Governance tokens are a type of digital token that lets holders vote on decisions for a blockchain project or app. For example, they might allow you to have a say in upgrades, fees, or how funds are used. 		Limited Influence Even though you can vote, your actual impact may be small if only a few holders control most of the tokens, or if many people don’t participate.
Value Can Be Volatile Prices of governance tokens often go up and down based on market speculation, not just their actual use.
Regulatory Uncertainty The rules around governance tokens aren’t clear in all countries. In some places, they could be treated like securities.
Protocol Risks Decisions made through governance votes can change the project in ways that might reduce the value or usefulness of the tokens.