Crypto Asset Trading Platforms
Pre-Registration Activities Undertaking1
To:

Ontario Securities Commission (the Principal Regulator) and the other members of theCanadian Securities Administrators (collectively, the CSA)

From:

Payward Canada Inc. (the Filer)

Re:

Undertaking in respect of pre-registration activities during the CSA review of the Filer’sapplication for registration and related application for exemptive relief conducted by
the Filer and on the Filer’s Platform (defined below) (the Undertaking)

Date:

March 24, 2023

Background
The Filer operates a proprietary internet-based platform and market for the trading of crypto
contracts based on crypto assets (collectively, the Filer’s Platform) that enable clients to buy, sell,hold, deposit and withdraw crypto assets such as Bitcoin, Ether, and anything commonly considereda crypto asset, digital or virtual currency, or digital or virtual token, through the Filer.
The Filer’s Platform constitutes a Dealer Platform and a Marketplace Platform as those terms aredefined in Joint CSA-IIROC Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms:
Compliance with Regulatory Requirements (CSA SN 21-329). In connection with the operation of
the Filer’s Platform, the Filer has:(a) made an application for registration in the category of restricted dealer that includes acompleted and signed Form 33-109F6 Firm Registration including all material schedules
and supporting documents (the Application for Registration) in each province and territory
in Canada;(b) made an application for prospectus relief, suitability relief, trade reporting relief, relief
from the requirement to be regulated as a clearing agency, and relief from the Marketplace
Rules, as defined below, in each jurisdiction in Canada where the Filer carries on or intends
to carry on business as a crypto asset trading platform (CTP) (the Application for Relief) inconnection with the operation of the Filer’s Platform;

1

For more information about the Pre-Registration Undertaking process, please see CSA Staff Notice 21-332 Crypto Asset
Trading Platforms: Pre-Registration Undertakings - Changes to Enhance Canadian Investor Protection available athttps://www.osc.ca/sites/default/files/2023-02/csa_20230222_21-332_crypto-trading-platforms-pre-regundertakings.pdf.

(c) paid all required fees applicable to the Application for Registration and the Application for
Relief; and(d) filed a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for
Service.
Interpretation
The provisions of this Undertaking are representations of and commitments by the Filer to the
Principal Regulator and to the CSA. The Filer will make best efforts to bring its operations into
compliance with securities legislation.2
The Filer’s parent corporation, Payward, Inc., has also provided the Acknowledgement andUndertaking set out in Schedule V to the Principal Regulator and to the CSA under which Payward,
Inc. on behalf of Payward, Inc. and its affiliates (the Payward Group) acknowledges thecommitments made by the Filer in the Undertaking and the Payward Group undertakes to support
and not interfere with the Filer’s activities and its directors’ independent judgment and to ensurethat the Payward Group’s activities will not undermine the Filer’s activities and its compliance with
Canadian regulatory obligations.
In this Undertaking,(a) in relation to paragraphs 8, 16(b), 17, 20 and 22 of Schedule I, the Filer undertakes to implement
these provisions within 120 days of the date of this Undertaking, and(b) for all other provisions, the Filer undertakes to implement such provisions within 90 days of thedate of this Undertaking,unless the provision otherwise indicates or the Principal Regulator provides written consent that
another timeframe is acceptable.
The Filer agrees to abide by the representations and commitments in this Undertaking until suchtime as the Principal Regulator has made a decision on the Filer’s Application for Registration andApplication for Relief or until such time as this Undertaking is withdrawn in accordance with theprovisions described below.
The representations and commitments set out in this Undertaking are based on the obligations
that will apply to the Filer once registered and are substantially consistent with the terms andconditions set out in the Filer’s Application for Relief. There are certain provisions in thisUndertaking that may not be consistent with the obligations that would apply to the Filer should
the Filer become registered, and those provisions in this Undertaking do not necessarily reflect thedecision that will be made by the Principal Regulator and the other members of the CSA in the
Applicable Jurisdictions in connection with the Application for Registration and the Application for
Relief.

2“Securities legislation” is defined in National Instrument 14-101 Definitions and includes legislation related to bothsecurities and derivatives.

The Filer understands that the Principal Regulator will disclose the names of the Filer, its applicableaffiliates and this Undertaking or the fact that the Filer has provided this Undertaking on the
Principal Regulator’s website, the website of other members of the CSA in the Applicable
Jurisdictions and/or the CSA website.
Definitions
In this Undertaking including the Schedules, the following terms have the following meanings:“Acceptable Third-party Custodian” means an entity that:(i)is one of the following:a. a Canadian custodian or Canadian financial institution;b. a custodian qualified to act as a custodian or sub-custodian for assets held in Canada
pursuant to section 6.2 [Entities Qualified to Act as Custodian or Sub-Custodian for
Assets Held in Canada] of NI 81-102;
c. a custodian that meets the definition of an “acceptable securities location” inaccordance with the Investment Dealer and Partially Consolidated Rules and Form 1 of
New Self-Regulatory Organization of Canada;
d. a foreign custodian for which the Filer has obtained the prior written consent from thePrincipal Regulator and the regulator or securities regulatory authority of the Applicable
Jurisdiction(s);3 ore. an entity that does not meet the criteria for a qualified custodian and for which the Filer
has obtained the prior written consent from the Principal Regulator and the regulator
or securities regulatory authority of the Applicable Jurisdiction(s);(ii)
is functionally independent of the Filer within the meaning of NI 31-103;(iii)
has obtained audited financial statements within the last twelve months, which
a. are audited by a person or company that is authorized to sign an auditor’s report under
the laws of a jurisdiction of Canada or a foreign jurisdiction and that meets theprofessional standards of that jurisdiction,b. are accompanied by an auditor’s report that expresses an unqualified opinion, andc. unless otherwise agreed to by the Principal Regulator, discloses on its statement offinancial position or in the notes of the audited financial statements the amount ofliabilities that it owes to its clients for holding their assets, and the amount of assets
held by the custodian to meet its obligations to those custody clients, broken down byasset;4 and(iv)
has obtained a Systems and Organization Controls (SOC) 2 Type 1 or SOC 2 Type 2 report
within the last twelve months, or has obtained a comparable report recognized by a similaraccreditation board satisfactory to the Filer’s Principal Regulator and the regulator or
securities regulatory authority of the Applicable Jurisdiction(s).

3For example, where the Ontario Securities Commission is the Principal Regulator or Ontario is an Applicable Jurisdiction,
any consent provided for in this Undertaking shall only be effective if given in writing by the Director (as defined insubsection 1(1) of the Securities Act (Ontario)).
4
Similar in concept to that described in SEC Accounting Bulletin No. 121 regarding the accounting for obligations tosafeguard crypto assets an entity holds for platform users.

“Account Appropriateness Factors” has the meaning ascribed to that term in paragraph 31 of
Schedule I;“Applicable Jurisdictions” means the jurisdictions in Canada in which the Filer carries on or intends
to carry on business as a CTP;
“Canadian custodian” has the meaning ascribed to that term in NI 31-103;“Canadian financial institution” has the meaning ascribed to that term in National Instrument 45106 Prospectus Exemptions;“Client Account” means an account opened by a client of the Filer using the Filer’s website and/or
mobile application to access the Filer’s Platform;“Client Limit” has the same meaning as in paragraph 33 of Schedule I;“Crypto Asset” means Bitcoin, Ether, and anything commonly considered a crypto asset, digital or
virtual currency, or digital or virtual token, that are not themselves securities or derivatives;“Crypto Asset Statement” has the meaning ascribed to that term in paragraph 38(e) of Schedule I;“Crypto Contract” means a client’s contractual rights relating to a Crypto Asset or a ValueReferenced Crypto Asset and related rights under the client’s agreement with the Filer’s Platform;“CSA SN 21-329” means Joint CSA/IIROC Staff Notice 21-329 Guidance for Crypto-Asset Trading
Platforms: Compliance with Regulatory Requirements;“Dealer Platform” has the meaning ascribed to that term in CSA SN 21-329;“foreign custodian” has the meaning ascribed to that term in NI 31-103;“Form 31-103F1” means Form 31-103F1 Calculation of Excess Working Capital;“KYP Policy” has the meaning ascribed to that term in paragraph 30 of Schedule I;“Liquidity Provider” means a crypto asset trading platform or marketplace or other entity that theFiler uses to fulfill its obligations under Crypto Contracts;“Marketplace Platform” has the meaning ascribed to that term in CSA SN 21-329;“Marketplace Rules” means(i) National Instrument 21-101 Marketplace Operation (NI 21-101),(ii) National Instrument 23-101 Trading Rules (NI 23-101), and(iii) National Instrument 23-103 Electronic Trading and Direct Access to Marketplaces (NI 23103);

“NI 31-103” means National Instrument 31-103 Registration Requirements, Exemptions andOngoing Registrant Obligations;“NI 81-102” means National Instrument 81-102 Investment Funds;“permitted client” has the meaning ascribed to that term in NI 31-103;“promoter” has the meaning ascribed to that term in Canadian securities legislation;“Proprietary Token” means a Crypto Asset that is not a Value-Referenced Crypto Asset and forwhich the Filer or an affiliate of the Filer acted as the issuer (and mints or burns the Crypto Asset)
or a promoter;“qualified custodian” has the meaning ascribed to that term in NI 31-103;“Registered CTP” means a CTP that is registered as a restricted dealer under securities legislationin one or more Applicable Jurisdictions.
“Risk Statement” has the meaning ascribed to that term in paragraph 36 of Schedule I;“Specified Crypto Asset” means Bitcoin, Bitcoin Cash, Ether, Litecoin and any other Crypto Asset inrespect of which the Principal Regulator and the other CSA members in the Applicable Jurisdictions
have provided written confirmation to the Filer subsequent to the date of this Undertaking thatsuch Crypto Asset may be designated as a Specified Crypto Asset for the purposes of thisUndertaking;“Staking” means the act of committing or locking Crypto Assets in smart contracts to permit theowner or the owner’s delegate to act as a Validator for a particular proof-of-stake consensus
algorithm blockchain;“Staking Affiliates” means Payward Commercial, Ltd., Staked Securely LLC, Staked Cayman, Ltd.
and any future Payward Group affiliate which may provide Staking Services.
“Staking Services” means any and all services conducted by the Filer and third parties in order toenable the Staking of Crypto Assets that are held on the Filer’s Platform for the benefit of clients;“Validator” in connection with a particular proof-of-stake consensus algorithm blockchain, meansa node meeting protocol requirements that participates in consensus by broadcasting votes andcommitting new blocks to the blockchain; and“Value-Referenced Crypto Asset” means a crypto asset that is designed to maintain a stable value
over time by referencing the value of a fiat currency or any other value or right, or combination
thereof.
In this Undertaking a person or company is an affiliate of the Filer if(a) one of them is, directly or indirectly, a subsidiary of the other, or(b) each of them is controlled, directly or indirectly, by the same person.
Payward Group
A. The Filer is a wholly-owned subsidiary of Payward, Inc. (Payward). Payward, together with theFiler and other direct and indirect subsidiaries of Payward (collectively Payward Group), operate
globally under the business name “Kraken”. Payward Group owns and operates a global crypto
asset exchange (the Kraken Spot Exchange) and custody platform.
B. The Kraken Spot Exchange commenced trading in 2013.
C. The Filer has been offering services to Canadian clients since 2018.
D. The Filer has an independent affiliate, Payward Financial, Inc. doing business as Kraken Bank
(Kraken Bank) that became the first chartered Special Purpose Depository Institution in theState of Wyoming in September 2020. Upon the commencement of operations by Kraken Bank,
it is expected that Kraken Bank will satisfy the Acceptable Third-party Custodian requirements
established by the CSA for custodians of Crypto Assets, and that Canadian client assets will be
migrated to Kraken Bank.
E. The Filer has Staking Affiliates, one or more of which operates Validators for Crypto Assets forwhich the Filer offers Staking Services. In addition, the Filer or the Staking Affiliates may subcontract the operation of Validators for certain Crypto Assets for which the Filer offers Staking
Services to third-party service providers.
Undertaking re Pre-Registration Activities
Until such time that a decision is made by the Principal Regulator and the other members of the
CSA in the Applicable Jurisdictions in connection with the Application for Registration and theApplication for Relief, and unless this Undertaking is otherwise withdrawn by the Filer inaccordance with the manner described below, the Filer hereby undertakes to comply with theprovisions of this Undertaking:1.

The Filer will conduct all transactions with clients resident in Canada in compliance with the
Pre-Registration Provisions as set out in Schedule I. In particular, as set out in paragraph 42
of Schedule I, the Filer confirms that Crypto Assets held for the benefit of clients are held in
trust, separate and apart from the assets of non-Canadian clients, separate and apart fromits own assets and are not pledged, re-hypothecated or otherwise used in any way by theFiler.

2.

The Filer will comply with the Reporting Provisions as set out in Schedule II.

3.

The Filer operates a Dealer Platform and a Marketplace Platform, and the Filer will comply
with the Marketplace Provisions as set out in Schedule III.

4.

The Filer offers Staking Services and will comply with the Staking Services Provisions as set
out in Schedule IV.

5.

The Filer will ensure that its board of directors will have one or more independent director(s)resident in Canada.

6.

The Filer has and will continue to confirm that it is not liable for the debt of an affiliate oraffiliates that could have a material negative effect on the Filer.

7.

The Filer accepts and agrees that the Undertaking will be governed and interpreted inaccordance with the laws of the Principal Regulator or the Applicable Jurisdiction and thelaws of Canada applicable therein.

8.

The Filer has designated an individual as the Filer’s Ultimate Designated Person (UDP) thatis a Canadian resident and is on the board of directors of the Filer.

9.

The Filer has designated an individual as the Filer’s Chief Compliance Officer (CCO) that is a
Canadian resident and:(a) has the education, training and experience that a reasonable person would
consider necessary to perform the role of a CCO competently,(b) is responsible for the maintenance and application of policies and procedures forassessing compliance by the Filer and individuals acting on behalf of the Filer, withsecurities legislation,(c) monitors and assesses compliance by the Filer and individuals acting on its behalf,with securities legislation, and(d) has direct access to the board of directors, or individuals acting in such capacity for
the Filer, at such times as the CCO may consider necessary or advisable in view of
the CCO’s responsibilities.

10. The Filer will promptly inform the Principal Regulator in writing of any material change inthe business, activities, operations or financial results or condition of the Filer, or an affiliateof the Filer, or control persons of the Filer or an affiliate that may in the opinion of areasonable person be material to the Filer’s clients or the Principal Regulator.
11. The Filer will promptly inform the Principal Regulator in writing of any material breach or
failure of(a) the Filer’s or any of its Acceptable Third-party Custodian’s system of controls or
supervision, and what steps have been taken by the Filer to address each suchbreach or failure, and(b) the system of controls or supervision of each affiliate of the Filer that could have amaterial impact on the Filer and what steps have been taken to address each suchbreach or failure.
The loss of any amount of Crypto Assets impacting the Filer’s clients will be considered amaterial breach or failure.
12. The Filer will promptly inform the Principal Regulator in writing if a self-regulatoryorganization or any other regulatory authority or organization or governmental authority inany jurisdiction including any foreign jurisdiction initiates proceedings or renders a judgment
related to a compliance or enforcement action involving the Filer, an affiliate of the Filer, ora control person(s) of an affiliate that may reasonably be perceived by the Principal
Regulator or a client of the Filer to be material to the client.
13. The Filer will promptly inform the Principal Regulator in writing if the Filer or an affiliate of
the Filer becomes subject to any of the following under the laws of any jurisdiction including
any foreign jurisdiction:(a) a bankruptcy, a filing for bankruptcy or a proceeding governing an event similar toa bankruptcy;(b) a proposal, including a consumer proposal, or restructuring under any legislation
relating to bankruptcy or insolvency or any similar proceeding;(c) proceedings under any legislation relating to the winding up or dissolution of theentity, or under the Companies’ Creditors Arrangement Act (Canada);(d) any proceedings, arrangement or compromise with creditors, including theappointment of a receiver, receiver-manager, administrator or trustee.
14. The Filer will promptly inform the Principal Regulator in writing if a control person of anaffiliate is subject to any of the listed events, as provided in the preceding paragraph, if theoccurrence of such an event may reasonably be perceived by the Principal Regulator or aclient of the Filer to be material to the client.
15. The Filer will work diligently and use its commercially reasonable best efforts to advancethe Application for Registration and Application for Relief and the Filer acknowledges that,unless waived in writing by the Principal Regulator, the Filer will have obtained a decisionfrom the Principal Regulator respecting registration by the date that is 12 months from thedate of the Undertaking or it will promptly cease to carry on all registerable activity in eachof the Applicable Jurisdictions.
16. The Filer further acknowledges that the giving of this Undertaking does not mean that the Filer
has been or will be granted registration in any Applicable Jurisdiction or that the relief
requested in the Application for Relief will be granted in any Applicable Jurisdiction. The Filer
undertakes not to make any representation to suggest that it is registered under securities

legislation in Canada. The Filer’s Platform will clearly indicate that the Filer has submitted an
Application for Registration under securities legislation in Canada but the Filer is notregistered and is operating pursuant to the provisions of a Pre-Registration Undertaking.
There can be no assurance that the Filer will be registered and if the Filer fails to become
registered in any Applicable Jurisdiction the Filer will promptly cease carrying on registrable
activity in such Applicable Jurisdictions.
17. The Filer further acknowledges that the Filer’s compliance with the Pre-Registration Provisions as
set out in Schedule I does not mean that any documents delivered or made available to clients
have been reviewed or approved by the Principal Regulator or other members of the CSA andthe Filer further acknowledges that it may be required to make changes to any such documents
as a result of the continued review of the Application for Registration and the Application for
Relief.
18. The Filer further acknowledges that the Principal Regulator or other members of the CSA may
examine the business, conduct, financial affairs, books, records and other documents of the Filerand its applicable affiliates and control persons for the purpose of determining if the Filer iscomplying with this Undertaking, securities or other applicable legislation in Canada, or acting
contrary to the public interest.
19. The Filer will provide not less than 30 days’ prior written notice to the Principal Regulator andthe other members of the CSA in the Applicable Jurisdictions if the Filer wishes to withdraw
this Undertaking. Where such notice is given, the Filer will cease to carry on registerable activity
in each of the Applicable Jurisdictions at the time the Undertaking is withdrawn. All obligations
respecting the provision of information relevant to the period in which the Filer was in operation
will survive the withdrawal of this Undertaking.
For Payward Canada Inc.
Signature: “Mark Greenberg”
Name: Mark Greenberg
Title: President, Payward Canada Inc.
“I have authority to bind the firm”
Date: March 24, 2023

Schedule I
Pre-Registration Provisions
Pre-Registration Business Conduct Obligations
Acting fairly, honestly and in good faith1.

The Filer will act and will take reasonable steps to cause each individual acting on its behalf toact fairly, honestly and in good faith with clients.

System of controls and supervision
2. The Filer will establish, maintain and apply written policies and procedures that establish asystem of controls and supervision sufficient to(a) provide reasonable assurance that the firm and each individual acting on its behalf complies
with securities legislation, and(b) manage the risks associated with its business, including operations that are not related to
trading securities or derivatives, in accordance with prudent business practices.
3. Further to paragraph 2(a), the Filer’s policies and procedures will reflect that the Filer is seeking
exemptive relief from certain regulatory requirements under the Filer’s Application for Relief
unless the Filer has been informed by staff of the Principal Regulator that staff do not support
the Filer’s request for exemptive relief from certain regulatory requirements.
4.

Without limiting the foregoing, the Filer will establish, maintain and apply policies andprocedures relating to confidentiality, information containment and the supervision of tradingin Crypto Contracts and Crypto Assets by individuals acting on behalf of the Filer and will
maintain material non-public information about Crypto Contracts and Crypto Assets in
confidence.

Conflicts of interest
5.

The Filer will establish, maintain and apply reasonable policies and procedures to identify
existing material conflicts of interest, and material conflicts of interest that the Filer in its
reasonable opinion would expect to arise, between the Filer, including each individual acting on
behalf of the Filer, and its clients.

6. The Filer will address an existing or potential conflict of interest identified under the preceding
paragraph in the best interests of the client. If a client, acting reasonably, would expect to be
informed of a conflict of interest identified under the preceding paragraph, the Filer will
disclose, in a timely manner, the nature and extent of the conflict of interest to a client whose
interest conflicts with the interest identified.

Capital requirements, financial information and provision of information
7. The Filer will deliver financial information as provided under section 12.12 of NI 31-103[Delivering financial information – dealer]. Where the Filer is temporarily unable to obtain
unconsolidated audited financial statements, the Filer will (i) obtain and provide to the Principal
Regulator unconsolidated audited financial statements within 90 days of the date of thisUndertaking and (ii) until the Filer is able to provide unconsolidated audited financial
statements, provide to the Principal Regulator relevant financial information as agreed to by
the Principal Regulator, such as consolidated audited financial statement of its parent entity
and unaudited financial statement of the Filer.
8. The Filer’s excess working capital as calculated in accordance with Form 31-103F1 must not beless than zero for 2 consecutive days. Should the Filer's excess working capital be less than zero,
the Filer will notify the Principal Regulator and/or the other Applicable Jurisdictions as soon as
possible.
9. The Filer will exclude from the excess working capital calculation all the Crypto Assets, including
Proprietary Tokens, and all Value-Referenced Crypto Assets it holds for which there is nooffsetting by a corresponding current liability, such as Crypto Assets held for its clients as
collateral to guarantee obligations under Crypto Contracts included on line 1, Current assets.
This will result in the exclusion of all the Crypto Assets inventory, including Proprietary Tokens
inventory, and all of the Value-Referenced Crypto Assets inventory held by the CTPs from Form
31-103F1 (Schedule 1, line 9).
10. The Filer will provide within 30 days of the date of this Undertaking to the Principal Regulator
a completed Form 31-103F1 regarding the excess working capital it holds and the Filer will
confirm the accuracy of the information provided. The Filer will provide updated information
relating to the excess working capital it holds as requested by the Principal Regulator from time
to time.
11. If the Filer has affiliates located outside of Canada that trade Crypto Assets or Crypto Contracts
as a part of their business or that provide services to or have an intercompany arrangementwith the Filer, then the Filer has provided, and if there are material changes to such information
will provide, to the Principal Regulator the following:(a) relevant information, as determined by the Principal Regulator, about affiliates andmaterial service providers to the Filer. For greater certainty, relevant information includes
policies and procedures relating to how existing or potential conflicts with the Filer are
addressed and material contracts pertaining to each affiliate and entity that provides
material services to the Filer;(b) disclosure of any and all transactions involving affiliates and confirmation that any
transactions and services with affiliates are for appropriate business reasons; and(c) confirmation that the Principal Regulator may contact and discuss the Filer and its affiliateswith other international regulators.

12. In addition to any reporting requirements provided for in the Schedules of this Undertaking,upon the request of the Principal Regulator, the Filer will promptly deliver to the Principal
Regulator any information the Principal Regulator may reasonably require in a form that is
acceptable to the Principal Regulator, including but not limited to:(a) any audit reports regarding the financial reporting of the Filer, including a SOC 1 report, if
available; and(b) up to date data reporting to the Principal Regulator, in lieu of or in addition to the datareporting under Schedule II.
13. The Filer will direct its auditor in writing to conduct any audit or review reasonably required by
the Principal Regulator, and deliver a copy of the direction to the Principal Regulator. The Filer
will not destroy or conceal any information or documents or otherwise fail to cooperate with areasonable request made by an auditor in the course of an audit.
Risk Management
14. The Filer will assess liquidity risk and concentration risk posed by Liquidity Providers upon which
the Filer relies to execute a trade for its clients.
15. The liquidity and concentration risks assessment will consider trading volume data as per
paragraph 1(g) of Schedule II and complete a historical analysis of each Liquidity Provider and a
relative analysis between the Liquidity Providers. Consideration should be given to whether the
Liquidity Provider has issued its own Proprietary Tokens and to consider limiting reliance onthese Liquidity Providers.
Restrictions on products and services
16. The Filer will only trade Crypto Contracts based on (a) Crypto Assets that the Filer has reasonably
determined are not in and of themselves securities or derivatives, or (b) Value-Referenced
Crypto Assets in accordance with paragraph 17 of this Schedule.
17. The Filer will not permit its clients to buy or deposit Value-Referenced Crypto Assets through a
Crypto Contract without the prior written consent of the Principal Regulator and the regulator
or securities regulatory authority of the Applicable Jurisdiction(s) and subject to such terms andconditions as may be imposed on the Filer and the issuer of the Value-Referenced Crypto Assets
by the regulator or securities regulatory authority. Clients can continue to hold Crypto Contracts
based on Value-Referenced Crypto Assets that are in place as of the date of this Undertaking
and can sell or withdraw the Value-Referenced Crypto Assets upon which those Crypto
Contracts are based.
18. The Filer will only engage in the business of trading Crypto Contracts in accordance withparagraph 16 of this Schedule and providing Staking Services in relation to Crypto Assets held
under the Filer’s Crypto Contracts in accordance with Schedule IV of this Undertaking, andperform its obligations under those Crypto Contracts, and will not offer derivatives based on
Crypto Assets or Value-Referenced Crypto Assets other than Crypto Contracts to clients.
19. The Filer will seek the appropriate approvals from the Principal Regulator and, if required under
securities legislation, the regulator or securities regulatory authority of any other Applicable
Jurisdiction, prior to undertaking any other activity governed by securities legislation.
20. The Filer will not offer Crypto Asset lending products or services to clients without the priorwritten consent of the Principal Regulator and the regulator or securities regulatory authorityof the Applicable Jurisdiction(s) in which such products or services are offered.
21. The Filer will not trade Crypto Assets or Value-Referenced Crypto Assets or Crypto Contracts
based on Crypto Assets or on Value-Referenced Crypto Assets with a client in an Applicable
Jurisdiction, without the prior written consent of the regulator or securities regulatory authorityof the Applicable Jurisdiction, where the Crypto Asset or Value-Referenced Crypto Asset wasissued by or on behalf of a person or company that is or has in the last five years been the subjectof a publicly announced order, judgment, decree, sanction, fine or administrative penalty
imposed by, or has entered into a publicly announced settlement agreement with, agovernment or government agency, administrative agency, self-regulatory organization,
administrative tribunal or court in Canada or in a Specified Foreign Jurisdiction in relation to aclaim based in whole or in part on fraud, theft, deceit, aiding and abetting or otherwise
facilitating criminal activity, misrepresentation, violation of anti-money laundering (AML) laws,
conspiracy, breach of trust, breach of fiduciary duty, insider trading, market manipulation,
unregistered trading, illegal distributions, failure to disclose material facts or changes, or
allegations of similar or analogous conduct. For the purposes of this condition, the term
“Specified Foreign Jurisdiction” means any of the following: Australia, Brazil, any member
country of the European Union, Hong Kong, Japan, Republic of Korea, New Zealand, Singapore,
Switzerland, United Kingdom of Great Britain and Northern Ireland, the United States ofAmerica, and any other jurisdiction that the Principal Regulator shall advise.
Restriction on margin and leverage
22. The Filer will not offer margin, credit or other forms of leverage to clients in connection withtrading of Crypto Contracts, Crypto Assets or Value-Referenced Crypto Assets on the Filer’s
Platform.
Restrictions on trading Proprietary Tokens
23. The Filer will not permit its clients to buy or deposit Proprietary Tokens through a Crypto
Contract, unless otherwise agreed to in writing by the Principal Regulator and the regulator or
securities regulatory authority of the Applicable Jurisdiction(s). Clients can continue to hold
Crypto Contracts based on Proprietary Tokens that are in place as of the date of this Undertaking
and can sell or withdraw the Proprietary Tokens upon which those Crypto Contracts are based.

No recommendations or advice
24. Neither the Filer nor any representative of the Filer will provide recommendations or advice toany client or prospective client.
Advertising and social media use
25. The Filer has reviewed Joint CSA-IIROC Staff Notice 21-330 Guidance for Crypto-Trading
Platforms - Requirements relating to Advertising, Marketing and Social Media Use and federal
government guidance on the general scope of the false or misleading representations anddeceptive marketing practices provisions of the Competition Act,5 and will establish, maintainand apply reasonable policies and procedures to ensure advertising and social media use
regarding the Filer’s Platform by the Filer and persons and companies acting on behalf of theFiler is fair, balanced and not misleading.
Until such time as the Filer obtains registration in the Applicable Jurisdictions, the Filer will also
include the following statement (or a link to the following statement when impractical toinclude) in all advertising and social media that is related to the Filer’s Platform and targeted at
Canadian investors:“Payward Canada Inc., operating as Kraken, has filed an application for registration in certain
Canadian jurisdictions but has not yet obtained registration. Until such time as Payward
Canada Inc., operating as Kraken, obtains registration, Payward Canada Inc. has agreed toabide by the terms of an undertaking available at the following link [Link to be inserted].”Account opening
26. The Filer will establish, maintain and apply eligibility criteria for the onboarding of all Canadianclients. The Filer is registered as a money services business (MSB) under regulations made under
the Proceeds of Crime (Monday Laundering) and Terrorist Financing Act (Canada). All Canadianclients must successfully complete the Filer’s know-your-client (KYC) process which satisfies therequirements applicable to MSBs under the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act and its regulations.
27. Each Canadian client who is an individual, and each individual who is authorized to give
instructions for a Canadian client that is a legal entity, will be 18 years or older.
28. The terms of service between the Filer and its Canadian Clients will be governed by the laws ofa jurisdiction of Canada, and state that the client’s Crypto Assets will be held in trust for and/or
for the benefit of the client.
Investment limits
29. The Filer will ensure that the maximum amount of Crypto Assets, excluding Specified Crypto
Assets, that a client, other than (i) clients resident in British Columbia, Manitoba and Québec
5

https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01315.html#Gen

and (ii) clients that are permitted clients and (iii) clients that are a Registered CTP, may enter
into Crypto Contracts to purchase and sell on the Filer’s Platform (calculated on a net basis andis an amount not less than $0) in the preceding 12 months does not exceed a net acquisition
cost of $30,000.6
Account appropriateness assessment
30. The Filer will establish and will maintain and apply reasonable policies and procedures (KYP
Policy) to review Crypto Assets before offering Crypto Contracts based on the Crypto Assets in
the Applicable Jurisdictions;
31. The Filer will perform product assessments pursuant to the KYP Policy and account assessments
taking into account the following factors (the Account Appropriateness Factors):(a) the client’s experience and knowledge in investing in Crypto Assets;(b) the client’s financial assets and income;(c) the client’s risk tolerance; and(d) the Crypto Assets approved to be made available to a client by entering into Crypto
Contracts on the Filer’s Platform.
32. The Account Appropriateness Factors will be used by the Filer to evaluate whether entering into
Crypto Contracts with the Filer is appropriate for a prospective client before the opening of a
Client Account.
33. The Filer will adopt and apply policies and procedures to conduct an assessment to establish
appropriate limits on the losses that a client that is not a permitted client or a Registered CTP
can incur, what limits will apply to such client based on the Account Appropriateness Factors(the Client Limit), and what steps the Filer will take when the client approaches or exceeds their
Client Limit. After completion of the assessment, the Filer will implement controls to monitor
and apply the Client Limit.
34. After completion of the account-level appropriateness assessment, a prospective client that is nota permitted client or a Registered CTP will receive appropriate messaging about using the Filer’s
Platform to enter into Crypto Contracts, which, in circumstances where the Filer has evaluatedthat entering into Crypto Contracts with the Filer is not appropriate for the client, will include
prominent messaging to the client that this is the case and that the client will not be permitted toopen an account with the Filer.
35. Additionally, the Filer will monitor Client Accounts after opening to identify activity inconsistent
with the client’s Account Appropriateness Factors. If warranted, the client may receive further
6

At the time the Filer implements this requirement, all clients of the Filer will be treated as having made no purchases in
the preceding 12 months.

messaging about the Filer’s Platform and the Crypto Assets, specific risk warnings and/or receive
direct outreach from the Filer about their activity. The Filer will monitor compliance with the
Client Limits established by the Filer as described above. If warranted, the client will receive
messaging when their account is approaching their Client Limit and receive information on steps
the client may take to prevent further losses.
Risk Statement
36. Before a prospective client opens an account with the Filer, the Filer will deliver to the client a
statement of risks (the Risk Statement), and will require the client to provide electronic
acknowledgement of having received, read and understood the Risk Statement.
37. For each client with a pre-existing Client Account at the date of the Undertaking and for whom
the Filer has not already performed the following with respect to such client as at the date ofthis Undertaking, the Filer will deliver to the client a Risk Statement and will require the client
to provide an electronic acknowledgement of having received, read and understood the Risk
Statement at the earlier of (a) before placing their next trade or deposit of Crypto Assets on theFiler’s Platform and (b) the next time they log in to their account with the Filer.
38. The Risk Statement will clearly explain the following in plain language:(a) the Crypto Contracts;(b) the risks associated with the Crypto Contracts;(c) a prominent statement that no securities regulatory authority has expressed an opinion
about the Crypto Contracts or any of the Crypto Assets made available through the Filer’s
Platform, including any opinion that the Crypto Assets themselves are not securities and/or
derivatives;(d) the due diligence performed by the Filer before making a Crypto Asset available through theFiler’s Platform, including the due diligence taken by the Filer to assess whether the Crypto
Asset is a security and/or derivative under the securities legislation of each of thejurisdictions of Canada and the securities and derivatives laws of the foreign jurisdiction withwhich the Crypto Asset has the most significant connection, and the risks if the Filer has
incorrectly determined that the Crypto Asset is not a security and/or derivative;(e) that the Filer has prepared a plain language description of each Crypto Asset made available
through the Filer’s Platform and of the risks of the Crypto Asset, with instructions as to whereon the Filer’s Platform the client may obtain the description (each, a Crypto Asset Statement),(f) the Filer’s policies for halting, suspending and withdrawing a Crypto Asset from trading on
the Filer’s Platform, including criteria that would be considered by the Filer, options
available to clients holding such a Crypto Asset, any notification periods and any risks toclients,

(g) the location and manner in which Crypto Assets are held for the client, the risks and benefits
to the client of the Crypto Assets being held in that location and in that manner, including
the impact of insolvency of the Filer or an Acceptable Third-party Custodian,(h) the manner in which the Crypto Assets are accessible by the Filer, and the risks and benefits
to the client arising from the Filer having access to the Crypto Assets in that manner,(i) that the Filer is not a member of the Canadian Investor Protection Fund (CIPF) and the
Crypto Assets held by the Filer (directly or indirectly through third parties) will not qualify
for CIPF protection,(j) a statement that certain statutory rights under securities legislation in Canada do not apply
in respect of the Risk Statement or a Crypto Asset Statement,(k) a prominent statement that the Filer has submitted an Application for Registration and an
Application for Relief under securities legislation of certain jurisdictions of Canada but there
is no guarantee these applications will be granted and the Filer is not currently registeredunder the securities or derivatives legislation of any jurisdiction of Canada and has not been
granted an exemption from any requirements of securities or derivatives legislation of any
jurisdiction of Canada, and(l) prior to a client making a decision to obtain Staking Services from the Filer, the disclosure
described in Schedule IV.
39. The Filer will ensure it has policies and procedures for updating 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 Crypto Contracts, Crypto Assets generally, or a
specific Crypto Asset, as the case may be. In the event the Risk Statement is updated, existingclients of the Filer will be promptly notified and provided with a copy of the updated Risk
Statement. In the event a Crypto Asset Statement is updated, existing clients of the Filer will bepromptly notified through electronic disclosure on the Filer’s Platform, with links provided tothe updated Crypto Asset Statement.
Custody of Cash, Crypto Assets and Other Assets
40. The Filer will hold client cash in a designated trust account with a Canadian custodian orCanadian financial institution. Despite the forgoing requirement to use a Canadian custodian ora Canadian financial institution, the Filer may hold client cash in a designated trust account witha foreign custodian if a reasonable person would conclude, considering all of the relevant
circumstances, including, for greater certainty, the nature of the regulation and the sufficiencyof the equity of the foreign custodian, that using the foreign custodian is more beneficial to theclient than using a Canadian custodian or a Canadian financial institution.
41. The Filer is proficient and experienced in holding Crypto Assets and will establish and will
maintain and apply policies and procedures that manage and mitigate custodial risks, including
but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets

and a mechanism for the return of the Crypto Assets to clients in the event of bankruptcy or
insolvency of the Filer. The Filer also maintains appropriate policies and procedures related to
IT security, cyber-resilience, disaster recovery capabilities and business continuity plans.
42. The Filer holds Crypto Assets (i) in an account clearly designated for the benefit of clients or intrust for clients, (ii) separate and apart from the assets of non-Canadian clients, and (iii) separate
and apart from its own assets and from the assets of any custodial service provider. The Filer
will not pledge, re-hypothecate or otherwise use any Crypto Assets held on behalf of its clients.
43. The Filer has and will retain the services of one or more Acceptable Third-party Custodians tohold not less than 80% of the total value of Crypto Assets held on behalf of clients.
44. The Filer will ensure that each Acceptable Third-party Custodian holds client Crypto Assets in adesignated trust account or in an account designated for the benefit of clients. Such accountshall be held and designated in such a fashion as to preserve the nature of the trust and toensure the ability to trace, by equitable or other means, the assets so held in the event ofbankruptcy, insolvency, restructuring, or similar activity of the Filer or the Acceptable Thirdparty Custodian. The terms of the custodian agreement between the Filer and each Acceptable
Third-party Custodian will clearly identify that the Crypto Assets are held in trust for the benefitof the Filer’s clients and specifies the actions the custodian will take in the event of theinsolvency of the Filer. If the Acceptable Third-party Custodian holds the Crypto Assets of theFiler or its affiliates, the Acceptable Third-party Custodian holds those Crypto Assets in a
separate account from those Crypto Assets held in trust for the benefit of the Filer’s clients.
45. The Filer will conduct due diligence on the Acceptable Third-party Custodians, including reviewing
a copy of the SOC 2 Type 1 or SOC 2 Type 2 audit report prepared by the Acceptable Third-party
Custodians’ auditors and has not identified any material concerns.
46. The Filer has established and will maintain and apply policies and procedures to ensure that(a) Each of the Filer’s Acceptable Third-party Custodians holds all Crypto Assets for clients of
the Filer in trust in a designated trust account in the name of the Filer, separate and apartfrom the assets of the Filer’s non-Canadian clients, and separate and distinct from the assetsof the Filer, the Filer’s affiliates and all of the Acceptable Third-party Custodian’s otherclients.
(b) Each of the Filer’s Acceptable Third-party Custodians maintains an appropriate level of
insurance for Crypto Assets held by the Acceptable Third-party Custodian. The Filer has
assessed the Acceptable Third-party Custodian’s insurance policy and has determined,
based on information that is publicly available and on information provided by the
Acceptable Third-party Custodian and considering the controls of the Acceptable Thirdparty Custodian’s business, that the amount of insurance is appropriate.
(c) Each of the Filer’s Acceptable Third-party Custodians has established and applies policies
and procedures that manage and mitigate the custodial risks, including, but not limited to,an effective system of controls and supervision to safeguard the Crypto Assets for which it

acts as custodian and to mitigate security breaches and cyber incidents. The Filer’s
Acceptable Third-party Custodian has established and applies written disaster recovery andbusiness continuity plans.
47. The Filer will establish, and will maintain and apply, policies and procedures that are reasonably
designed to ensure the Filer’s Acceptable Third-party Custodian’s records related to Crypto
Assets that the Acceptable Third-party Custodian holds in trust for clients of the Filer are
accurate and complete.
48. The Filer will provide an authorization and direction in a form acceptable to the Principal
Regulator for the Principal Regulator to obtain information directly from each of the Filer’s
Acceptable Third-party Custodians.
Insurance
49. The Filer will establish, and will maintain and apply, policies and procedures that are reasonably
designed to ensure that any third-party insurance obtained by the Filer includes coverage for
the Crypto Assets held by the Filer in cold and hot storage in the event of loss or theft inaccordance with the terms of the insurance policy in question.
Confidentiality of Clients’ Order and Trade Information
50. The Filer has established and will maintain and apply policies and procedures to safeguard theconfidentiality of client information, including information relating to their trading activities.
Books and Records
51. The Filer keeps books and records and other documents to accurately record its businessactivities, financial affairs and client transactions, and to demonstrate the Filer’s compliancewith applicable requirements of securities legislation as if the Filer were a registered firm,
including but not limited to:(a) a record of all clients and prospective clients granted or denied access to the Filer’s Platform;(b) daily trading summaries of all Crypto Assets traded, with transaction volumes and values;(c) records of all orders and trades, including the price, volume, times when the orders areentered, matched, cancelled or rejected, and the identifier of the client that entered theorder or that was counterparty to the trade; and(d) records of assets held on behalf of clients, including the location of such assets, with such
assets regularly reconciled to the records of the Acceptable Third-party Custodians or to theassets held by the Filer.

Reporting Requirements
52. The Filer will promptly notify the Principal Regulator of any of the following:(a) any material system failure involving the Filer’s business or involving the business of anaffiliate of the Filer and, if applicable, any clearing and settlement services, including
cybersecurity breaches, that has a material impact on its Canadian clients;(b) any material system failure involving the services of an affiliate of the Filer, and if
applicable, any clearing and settlement services of those entities, including cybersecurity
breaches, that impacts the Filer’s Canadian clients;(c) if the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading
Commission, the Financial Industry Regulatory Authority, the National Futures Associationor the Wyoming Division of Banking makes a final determination that Kraken Bank is not
permitted by that regulatory authority to hold Crypto Assets;(d) any known investigations of, or regulatory action against, the Filer, or an affiliate of theFiler, by a regulatory authority in any jurisdiction in which it operates which may impact
the operation of the Filer’s Platform in Canada;(e) details of any material litigation instituted against the Filer, or an affiliate of the Filer,
which may impact the operation of the Filer’s Platform in Canada;(f) notification that the Filer, or an affiliate of the Filer, has instituted a petition for a
judgment of bankruptcy or insolvency or similar relief, or to wind up or liquidate the Filer,
or an affiliate of the Filer, or has a proceeding for any such petition instituted against it;and(g) the appointment of a receiver or the making of any voluntary arrangement with creditors.
53. In addition to any other reporting required herein, the Filer and its applicable affiliates andcontrol person(s) will provide to the Principal Regulator, on a timely basis and on demand, any
report, data, document or information that the Filer and its applicable affiliates and control
person(s) have available or would be reasonably expected to have available regarding the Filer’sbusiness, including regarding its information technology system, software, any intra-company
arrangement or services, the marketplace service and, if applicable, any clearing and settlement
services provided to Canadian clients that may be reasonably requested by the Principal
Regulator from time to time. Unless otherwise prohibited under applicable law, the Filer will
share with the Principal Regulator information relating to regulatory and enforcement mattersthat will materially impact its business, including the marketplace service or any clearing andsettlement services provided to the Canadian clients.

Schedule II
Reporting Provisions
Data Reporting
1.

2.

The Filer will provide the following information to the Principal Regulator, and to the securities
regulatory authority or regulator in each of the Applicable Jurisdictions with respect to clientsin those jurisdictions individually, within 30 days of the end of each March, June, September
and December:(a)aggregate reporting of activity conducted pursuant to Crypto Contracts during theapplicable calendar quarter that will include the following:(i) number of Client Accounts opened each month in the quarter;(ii) number of Client Accounts closed each month in the quarter;(iii) number of trades in each month of the quarter;(iv) average value of the trades in each month of the quarter;(v) number of Client Accounts with a net acquisition cost greater than $30,000 of
Crypto Assets at the end of each month in the quarter;(vi) number of Client Accounts with no trades during the quarter;(vii) number of Client Accounts that have not been funded at the end of each month in
the quarter; and(viii) number of Client Accounts that hold a positive amount of Crypto Assets at the end ofeach month in the quarter;(b)

the details of any material client complaints received by the Filer during the calendar
quarter and how such complaints were addressed;(c)the details of any fraudulent activity or cybersecurity incidents on the Filer’s Platform
during the calendar quarter, any resulting harms and effects on clients, and the corrective
measures taken by the Filer to remediate such activity or incident and prevent similar
activities or incidents from occurring in the future;(d)the amount of any Crypto Assets held in hot wallets as of the end of the quarter,(e)

the amount of the guarantee described in paragraph (f) as of the end of the quarter;(f)

the name of the financial institution and the amount of any money held at the end of thequarter in an account with the financial institution, separate from the Filer’s operational
accounts and Filer’s Client Accounts, to supplement any insurance policy or guarantee
relating to the Filer’s hot wallets; and(g)the details of the transaction volume per Liquidity Provider per Crypto Asset during thequarter.

The Filer will deliver to the Principal Regulator and the regulator or the securities regulatory
authority in each of the Applicable Jurisdictions, in a form and format acceptable to theregulator or the securities regulatory authority, a report that includes the following anonymized
account-level data for activity conducted during the applicable calendar quarter pursuant to a
Crypto Contract for each client within 30 days of the end of each March, June, September andDecember:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)

unique account number and unique client identifier, as applicable;
jurisdiction where the client is located;the date the account was opened;
the amount of any fiat currency held by the Filer at the beginning of the reporting period
and at the end of the reporting period;
cumulative realized gains/losses on the Filer’s Platform since account opening in CAD;
unrealized gains/losses on the Filer’s Platform as of the report end date in CAD;
quantity traded, deposited and withdrawn by Crypto Asset during the quarter in numberof units;
Crypto Asset traded by the client;quantity held of each Crypto Asset by the client as of the report end date in units;
CAD equivalent aggregate value for each Crypto Asset traded by the client, calculated as
the amount in paragraph (i) multiplied by the market price of the asset in paragraph (h)as of the report end date;age of account in months;
if applicable, the Client Limit established by the Filer on each account; andinformation relating to the Staking Services as set out in Schedule IV.

3.

Within 7 calendar days from the end of each month, the Filer will deliver to the Principal
Regulator and the regulator or securities regulatory authority in each of the Applicable
Jurisdictions, a report of all accounts for which the Client Limits established pursuant toparagraph 33 of Schedule I were exceeded during that month.

4.

The Filer will deliver to the Principal Regulator within 30 days of the end of each March, June,
September and December, either:(a)(b)

blackline copies of changes made to the policies and procedures on the operations of its
wallets that were previously delivered to the Principal Regulator; ora nil report stating no changes have been made to its policies and procedures on theoperations of its wallets in the quarter.

5.

In addition to any other reporting required by securities legislation in Canada, the Filer will
provide, on a timely basis, any report, data, document or information that the Filer has available
or would be reasonably expected to have available to the Principal Regulator, including any
information about the Filer’s Acceptable Third-party Custodian(s) and the Crypto Assets held by
the Filer’s Acceptable Third-party Custodian(s), that may be requested by the Principal Regulator
from time to time as reasonably necessary for the purpose of monitoring compliance with thelegislation and the conditions in the Undertaking, in a format acceptable to the Principal
Regulator.

6.

Upon request, the Filer will provide the Principal Regulator and the regulators or securities

regulatory authorities of each of the Applicable Jurisdictions with aggregated and/or
anonymized data that the Filer has available or would be reasonably expected to have available
concerning client demographics and activity on the Filer’s Platform that may be useful toadvance the development of the Canadian regulatory framework for trading Crypto Assets.
7.

The Filer will promptly make any changes to its business practices or policies and proceduresthat may be required to address investor protection concerns that may be identified by the Fileror by the Principal Regulator arising from the operation of the Filer’s Platform.

Schedule III
Marketplace Provisions
Fair access1. The Filer will not unreasonably prohibit, condition or limit the access of any Canadian client.
2. The Filer will not permit unreasonable discrimination among its Canadian clients.
Market Integrity
3. The Filer will take reasonable steps to ensure that the operation of the marketplace does notinterfere with fair and orderly markets.
4. The Filer will establish, maintain and ensure compliance with policies and procedures to addressconcerns relating to fraud and market manipulation in connection with the marketplace,including policies and procedures to monitor for and investigate potential instances ofmanipulative and abusive trading.
5. The Filer will establish, maintain and ensure compliance with policies and procedures foraddressing and escalating complaints internally or to the regulators, as applicable, andgoverning the cancellation, variation or correction of trades executed through the marketplace
service.
Conflicts of Interest
6. The Filer will identify and address material conflicts of interest arising from the operation of themarketplace and the related services it provides, including conflicts between the interests of its
owners, its commercial interests and the responsibilities and sound functioning of themarketplace services and, if applicable, any clearing and settlement services.
Transparency of operations and of Order and Trade Information
7. The Filer will provide the Canadian clients with information reasonably necessary to enable
them to understand the marketplace services and, if applicable, any clearing and settlement
services, including how orders are handled and interact, including with Liquidity Providers, howtrades are priced and any associated fees or spreads.
8. For orders and trades entered into and executed on the marketplace, the Filer will makeavailable to the Canadian clients an appropriate level of information regarding those orders andtrades in real-time to facilitate the trading activities of the Canadian clients.
Systems and Internal Controls
9. The Filer will maintain effective internal controls over systems that support the marketplace
services and, if applicable, any clearing and settlement services, including internal controls toensure that its systems function properly and have adequate capacity and security.
10. The Filer will maintain effective information technology controls to support the marketplace
service and, if applicable, any clearing and settlement services, including controls relating tooperations, information security, cyber resilience, change management, network support andsystem software support.
11. The Filer will maintain, update and test a business continuity plan, including emergency
procedures, and a plan for disaster recovery that provides for the timely recovery of operations
and fulfilment of its obligations with respect to the marketplace service and, if applicable, any
clearing and settlement services, including in the event of a wide-scale or major disruption.
12. If applicable, the Filer will maintain effective procedures and processes to ensure the provisionof accurate and reliable clearing and settlement services.
13. If applicable, the Filer will maintain appropriate risk management policies and procedures andinternal controls in place to minimize the risk that settlement will not take place as expected.

Schedule IV
Staking Services Provisions
The Filer offers Staking Services to its clients. The Filer will provide the Staking Services either throughits Staking Affiliates or through Validators that operate blockchain validator nodes.
The Staking Services will be offered in accordance with the following additional terms and conditions:
1. The Staking Services will be offered in relation to the Crypto Assets that are subject to a Crypto
Contract between the Filer and a client and in a manner consistent with this Undertaking and inaccordance with the terms and conditions of the Undertaking.
2. Unless the Principal Regulator has provided its prior written consent, the Filer will offer clientsthe Staking Services only for (i) crypto assets of blockchains that use a proof of stake consensus
mechanism and (ii) the staked crypto assets that are used to guarantee the legitimacy of newtransactions the Validator adds to the blockchain.
3. The Filer is proficient and knowledgeable about staking Crypto Assets.
4. The Filer itself does not act as a Validator, unless the Principal Regulator has provided its priorwritten consent. The Filer will enter into written agreements with one or more Staking Affiliates
to stake Crypto Assets (directly or using a third party Validator) and the Filer will take reasonable
steps to ensure that each such Validator is proficient and experienced in staking Crypto Assets.
Account appropriateness assessment
5. The Filer’s KYP policies and procedures will include a review of 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 Filer's review will include, at a minimum, thefollowing:(a) the Crypto Assets that the Filer proposes to offer for staking;(b) the operation of the proof-of-stake blockchain for the Crypto Assets that the Filer
proposes to offer for staking;(c) the staking protocols for the Crypto Assets that the Filer proposes to offer for staking;(d) the risks of loss of the staked Crypto Assets, including from software bugs and hacks ofthe protocol;(e) the Validators engaged by the Filer, including, but not limited to, information about:i. the persons or entities that manage and direct the operations of the Validator,

ii. the Validator's reputation and use by others,iii. the approximate amount of Crypto Assets the Validator has staked on its own
nodes,
iv. the measures in place by the Validator to operate the nodes securely and reliably,v. the financial status of the Validator,
vi. the performance history of the Validator, including but not limited to the amountof downtime of the Validator and past history of "double signing" or "double
attestation/voting",
vii. 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, andviii. 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.
6. The Filer’s policies and procedures to assess account appropriateness for a client will include
consideration of the Staking Services to be made available to that client.
7. The Filer will apply the account appropriateness policies and procedures to evaluate whether
offering the Staking Services is appropriate for a client before providing access to an accountthat makes available the Staking Services and, on an ongoing basis, at least once in each 12month period.
8. If, after completion of an account-level appropriateness assessment, the Filer determines thatproviding the Staking Services is not appropriate for the client, the Filer will include prominent
messaging to the client that this is the case and the Filer will not make available the Staking
Services to the client.
9. The Filer 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 Filer will cease to stake those
Crypto Assets.
Disclosure
10. Before the first time a client allocates any Crypto Assets to be staked, the Filer will deliver to theclient the Risk Statement (as defined in Schedule I) that includes the risks with respect to staking
and the Staking Services described in paragraph 11 below, and will require the client toacknowledge having received, read and understood the Risk Statement.
11. The Filer 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:(a) the details of the Staking Services and the role of all third parties involved;(b) the due diligence performed by the Filer with respect to the proof-of-stake consensus
protocol for each Crypto Asset for which the Filer provides the Staking Services;(c) details of the Validators that will be used for the Staking Services and the due diligence
performed by the Filer with respect to the Validators;(d) the details of whether and how the custody of staked Crypto Assets differs from Crypto
Assets held on behalf of the Filer's clients that are not engaged in staking;(e) the general risks related to staking and any risks arising from the arrangements used by
the Filer to offer the Staking Services (e.g., reliance on third parties; risk of loss due totechnical errors or bugs in the protocol; hacks or theft from the crypto assets being heldin hot wallets, etc.) and how any losses will be allocated to clients;(f) whether the Filer will reimburse clients for any Crypto Assets lost due to slashing or otherpenalties imposed due to Validator error, action or inactivity or how any losses will beallocated to clients;(g) 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 orValidator, where such Crypto Assets will not be accessible to the client or will beaccessible only after payment of additional fees or penalties or forfeiture of any rewards(Lock-up Periods); and(h) how rewards are calculated on the staked Crypto Assets, including any fees charged by
the Filer or any Staking Affiliate or third party, how rewards are paid out to clients, andany associated risks.
12. Immediately before each time that a client allocates Crypto Assets to be staked under the
Staking Services, the Filer 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:(a) that the staked Crypto Assets may be subject to a Lock-up Period and, consequently, theclient 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;(b) that given the volatility of Crypto Assets, the value of a client's staked Crypto Assets
when they are able to sell or withdraw, and the value of any Crypto Assets earned

(c) through staking, may be significantly less than the current value;(d) how rewards will be calculated and paid out to clients and any risks inherent in thecalculation and payout of any rewards;(e) 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;(f) whether rewards may be changed at the discretion of the Filer;(g) unless the Filer guarantees any Crypto Assets lost to slashing, that the client may lose allor a portion of the client's staked Crypto Assets if the Validator does not perform as
required by the network;(h) if the Filer offers a guarantee to prevent loss of any Crypto Assets arising from the Staking
Services, including due to slashing, any limits on that guarantee and requirements for aclient to claim under the guarantee; and(i) that additional risks can be found in the Risk Statement and Crypto Asset Statement (asdefined in Schedule I), including the names and other information regarding thevalidators and information regarding Lock-up Periods and rewards, with a link to the Risk
Statement and Crypto Asset Statement.
13. Immediately before each time a client buys or deposits Crypto Assets that will be automaticallystaked pursuant to an existing agreement by the client to the Staking Services, the Filer will
provide prominent disclosure to the client that the Crypto Assets it is about to buy or deposit
will be automatically staked.
14. The Filer 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 withrespect to the Staking Services and/or Crypto Assets.
15. In the event of any update to the Risk Statement, for each existing client that has agreed to the
Staking Services, the Filer will promptly notify the client of the update and deliver to them acopy of the updated Risk Statement.
16. 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 Filer will promptly notify the client of the update and deliver to the client a copyof the updated Crypto Asset Statement.
Custody of Staked Crypto Assets

17. The Filer or its custodians will remain in possession, custody and control of the staked Crypto
Assets at all times.
18. In addition to the requirements set out in paragraph 42 of Schedule I, the Filer will hold thestaked Crypto Assets for its clients in one or more omnibus staking wallets in the name of theFiler separate and distinct from the Crypto Assets held for its clients that have not agreed tostaking those specific Crypto Assets.
19. The Filer will establish policies and procedures that manage and mitigate custodial risks forstaked Crypto Assets, including but not limited to, an effective system of controls andsupervision to safeguard the staked Crypto Assets.
20. If the Filer permits clients to remove Crypto Assets from the Staking Services prior to the expiryof any Lock-up Period, the Filer will establish and apply appropriate liquidity management
policies and procedures to fulfill withdrawal requests made, which may include using the Crypto
Assets it, or another Payward Group entity, holds in inventory. The Filer acknowledges that it
holds Crypto Assets in trust for its clients and will not use Crypto Assets of those clients who
have not agreed to stake those Crypto Assets for fulfilling such withdrawal requests.
21. If the Filer provides a guarantee to clients from some or all of the risks related to the Staking
Services, the Filer will establish, and will maintain and apply, policies and procedures to address
any risks arising from such guarantee.
22. In the event of bankruptcy or insolvency of the Filer, the Staking Affiliates or a Validator, theFiler will assume and will not pass to clients any losses arising from slashing or other penalties
arising from the performance or non-performance of the Staking Affiliates or Validator.
Ongoing Validator Monitoring
23. The Filer will monitor its Validators, including the Staking Affiliates, for downtime, jailing andslashing events and take any appropriate action to protect Crypto Assets staked by clients.
Staking Rewards, Fees and Losses
24. The Filer 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 under the Staking Services.
25. The Filer will regularly and promptly determine the amount of staking rewards earned by eachclient 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 Filer.
26. The Filer will clearly disclose the fees charged by the Filer for the Staking Services and provide aclear calculation of the rewards earned by each client that agrees to the Staking Services.

Staking Services Reporting
27. The Filer will provide certain reporting in respect of the preceding calendar quarter to its
Principal Regulator within 30 days of the end of March, June, September and December inconnection with the Staking Services, including, but not limited to:(a) the total number of clients to which the Filer provides the Staking Services;(b) the Crypto Assets for which the Staking Services are offered;(c) for each Crypto Asset that may be staked:
i. the amount of Crypto Assets staked,
ii. the amount of each such Crypto Assets staked that is subject to a Lock-up Period
as of the last day of the period covered by the report and the length of the Lockup Period;iii. the amount of Crypto Assets that clients have requested to unstake during theperiod covered by the report; andiv. the amount of rewards earned by the Filer and the clients for the Crypto Assets
staked under the Staking Services during the period covered by the report;(d) the names of any Validators used to conduct the Staking Services;(e) any instance of slashing, jailing or other penalties being imposed for validator error andthe details of why these penalties were imposed; and(f) any reporting regarding the Filer's liquidity management as requested by the Principal
Regulator.

Schedule V
Acknowledgement and Undertaking
To:

Ontario Securities Commission (the Principal Regulator) and the other members of theCanadian Securities Administrators (collectively, the CSA)

From:

Payward, Inc. (Payward)Re:

Acknowledgement and undertaking in respect of pre-registration activities conductedby Payward Canada Inc. (the Filer) during the CSA review of the Filer’s application forregistration and related application for exemptive relief (the Undertaking)

Date:

March 24, 2023

The undersigned, on behalf of Payward and its affiliates (Payward Group) acknowledges that theFiler has given the Undertaking on the date hereof, and undertakes that Payward Group:(i)will support and not interfere with the Filer’s activities and its directors’ independentjudgment; and(ii)will ensure that Payward Group’s activities will not undermine the Filer’s activities and its
compliance with Canadian regulatory obligations.

The undersigned acknowledges that, in connection with the Undertaking:(i)the Principal Regulator will disclose the names of the Filer, its applicable affiliates and thefact that the Filer has provided the Undertaking, and that the undersigned has provided
this undertaking, on the Principal Regulator’s website, the website of other members of
the CSA in the Applicable Jurisdictions and/or the CSA website.
“David Ripley”
Name: David Ripley
Title: Chief Operating Officer, Payward, Inc.
“I have authority to bind the firm”
Date: March 24, 2023