Flowrex Conflicts of Interest Policy

1. Purpose and Regulatory Context

This Conflicts of Interest Policy (“Policy”) is established to ensure that The Firm, a business-to-business (B2B) crypto settlement service provider, complies fully with Article 72 of the Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114, “MiCA”). MiCA requires crypto-asset service providers (CASPs) to implement and maintain effective policies and procedures to identify, prevent, manage, and disclose conflicts of interest. The purpose of this Policy is to outline how The Firm will fulfill these obligations in its current business (settlement services for institutional clients), and to set standards for fairness and integrity in our operations. This Policy will be reviewed and updated as needed to remain effective and proportionate to the Firm’s activities.

2. Scope

This Policy applies to all directors, employees, and any persons involved in The Firm’s services. It covers conflicts that may arise between the Firm (including its staff, management, or any affiliated group entities) and a client, or between two or more clients of the Firm. Even though The Firm currently offers only B2B crypto settlement services, the Policy is forward-looking and will accommodate additional services or business lines as they are introduced. All staff are responsible for understanding and adhering to this Policy, and management is responsible for enforcing it.

3. Definition of Conflict of Interest

For purposes of this Policy, a conflict of interest is any situation in which the Firm or its personnel’s own interests (financial, commercial, or personal), or interests of a closely related party, may conflict with the best interests of a client or the Firm’s duties. Conflicts can also arise between different clients if the Firm’s actions for one client could materially disadvantage another. In line with MiCA, this Policy considers conflicts involving not only the Firm and its clients but also conflicts arising from the activities of any group companies or affiliates of The Firm.

Examples of potential conflicts of interest include:

The Firm or an employee has a financial incentive to favor one client over another (e.g. prioritizing settlement for a client in which the Firm has an ownership stake or from whom the Firm derives greater revenue).
An employee’s personal relationships or outside investments conflict with the interests of a client (for instance, an employee holding a significant crypto-asset that is subject to the Firm’s settlement process, potentially influencing their objectivity).
The Firm (or its affiliates) considering engaging in additional activities (such as advisory services, custody, or proprietary trading) that could conflict with the Firm’s duty to provide independent and unbiased settlement services to clients.
Receipt of any inducements, gifts, or favors from clients or third parties that could improperly influence the Firm’s obligation to act in clients’ best interests.

By clearly defining conflicts of interest, the Firm aims to proactively identify situations where a conflict may arise and ensure appropriate measures are in place to avoid or manage them.

4. Identification of Potential Conflicts

The Firm maintains robust procedures to identify potential and actual conflicts of interest at every level of its operations. All employees and managers are required to be vigilant in recognizing situations that might lead to a conflict. Key steps in our identification process include:

Initial and Ongoing Assessment: Before launching any new business activity or service, a conflict of interest assessment is conducted. For our current B2B settlement service, we have mapped out typical workflows and relationships to pinpoint where conflicts could occur. We continuously assess our operations for new conflict scenarios, especially as the crypto market and our business evolve.
Employee Declarations: All personnel must disclose any outside engagements or financial interests that might conflict with their duties to the Firm or its clients. This includes disclosure of other employment, directorships, significant investments in crypto-assets or related companies, or close personal relationships with clients. Such disclosures are reviewed by the Compliance Officer and recorded in the Conflicts of Interest Register (see Section 7).
Training and Awareness: We conduct training for all staff on what constitutes a conflict of interest and how to report potential issues. Through regular training, employees learn to recognize conflicts (including less obvious ones) and are reminded of their duty to avoid placing personal interest above client interests.
Monitoring of Business Activities: The Compliance function monitors business activities (such as client onboarding, transaction flow, and any new partnerships) to identify any new conflicts that may not have been previously documented. If, for example, the Firm were to enter into a partnership with a third-party platform or if a client becomes a significant shareholder of the Firm, these scenarios would be examined for conflicts.

If any potential conflict of interest is identified through these processes, it is flagged for evaluation and action under the management procedures described in Section 4. Employees are required to promptly inform the Compliance Officer or senior management of any situation they believe may involve a conflict of interest.

5. Prevention and Management of Conflicts

Where a conflict of interest is identified, The Firm’s primary objective is to prevent the conflict from adversely affecting clients. We implement internal arrangements and controls to eliminate or mitigate the conflict at its source, in accordance with MiCA Article 72(1). Key measures include:

Organizational Separation: When appropriate, we establish information barriers (“Chinese walls”) or segregate duties to prevent sensitive information from passing between teams if such flow could lead to misuse or favoritism. For example, if in the future the Firm engages in another activity (e.g. proprietary trading or advisory), those activities will be run independently from the settlement operations to avoid undue influence or information leakage.
No Influence Policies: Employees must refrain from participating in or influencing any business decision in which they have a personal interest. For instance, if an employee has a personal stake in a client’s business, that employee will not be involved in negotiating or handling that client’s settlement transactions. This helps prevent personal interests from biasing our professional actions.
Fair Dealing Procedures: We ensure fair treatment of all clients. Our settlement service operates on a non-discriminatory basis, meaning no client receives preferential treatment in processing times, access to services, or information. Procedures and automated systems are designed so that settlements are queued and processed objectively (e.g. first-in, first-out or according to pre-defined priority rules that are the same for all clients).
Avoidance of Incompatible Roles: The Firm will avoid undertaking roles or services that are inherently incompatible and could create unmanageable conflicts. For example, as long as we operate a pure settlement service, we will not engage in proprietary trading of crypto-assets (since trading on our own account could conflict with clients’ interests in fair settlement prices or priority). If we ever decide to expand into such areas, it will be done only after implementing robust safeguards or separate subsidiaries to manage the conflict, or else we will refrain from the activity entirely.

In every conflict scenario, the first preference is to prevent the conflict from arising. If prevention is not fully possible, we then manage the conflict through these mitigation controls to ensure that clients’ interests are not compromised. All decisions on conflict management strategies are documented. Senior management and the Compliance Officer will escalate material conflicts to the Board of Directors if the conflict is serious or novel, to decide on the appropriate course of action (including the possibility of declining to act in a situation if a conflict cannot be adequately mitigated).

If a conflict of interest cannot be prevented or fully mitigated by the above measures, The Firm will as a last resort consider disclosure to the client (see Section 6) and obtaining the client’s informed consent before proceeding, or ultimately refusing to proceed with the service if the conflict poses an unacceptable risk to the client’s interests. In line with regulatory expectations, reliance on disclosure alone is insufficient unless all reasonably effective internal measures have been exhausted.

6. Proportionality and Scope of the Policy

This Policy is designed to be proportionate to The Firm’s current size, services, and risk profile, as required by MiCA. Given that The Firm at present only provides B2B crypto settlement services, the nature of potential conflicts is relatively limited and specific. We have tailored our conflicts management framework to reflect this business model. For example, because we do not currently offer advisory services, custody, or trading, the Policy focuses on conflicts in the context of settlement operations (e.g. fair processing of transactions, handling of client information, etc.) rather than conflicts that would arise from other services.

Key proportionality considerations include:

Current Business Model: Our sole service of crypto-asset transfer/settlement on behalf of clients means we primarily face operational conflicts (such as treating clients equally in settlements). We currently do not engage in activities like giving investment advice, managing portfolios, or making markets, which have their own conflict risks. Thus, our procedures correspond to the conflicts realistically arising from settlement services.
Organizational Size and Structure: As a growing but currently modest-sized firm, our staff and departments are limited. This makes communication about conflicts straightforward and oversight more direct. The controls we have in place (such as oversight by the Compliance Officer and management) are calibrated to our size – effective without being unduly complex.
Avoidance of Complex Remuneration (at this stage): We have a simple remuneration structure currently (see Section 6) and no incentive programs that would drive high-risk behavior. This reduces the likelihood of internally driven conflicts.

Despite this tailored approach, The Firm acknowledges that the scope and complexity of our services may expand in the future. If we introduce new services or business lines (for example, adding crypto custody, advisory services, facilitating trading, or any form of proprietary trading), or if we implement performance-based remuneration or sales incentive schemes, we will promptly review and revise this Policy to ensure it remains appropriate. The proportionality principle means the Policy will evolve in line with the Firm’s growth and the range of activities. Any material change in our business model triggers an immediate conflict risk assessment and Policy update, subject to Board approval (see Section 8). This commitment ensures that our conflicts of interest management remains effective and MiCA-compliant even as we expand.

7. Remuneration and Avoidance of Conflicts

The Firm’s remuneration policies and practices are designed to not create conflicts of interest, in accordance with Article 72(3) of MiCA. We recognize that how we compensate our staff can influence their behavior, so we have put safeguards in place to align incentives with client interests:

No Sales-Commissions Tied to Volume: Employees are not paid based on the volume of transactions settled or the revenue generated from specific clients in a way that could encourage preferential treatment of some clients over others. All clients should receive the same diligent service regardless of their contribution to revenue.
Balanced Performance Metrics: Currently, staff compensation (salary and any discretionary bonuses) is based on broad performance criteria such as overall company success, operational excellence, compliance with regulations, and quality of service — not on individual profit centers that could incentivize harmful conflicts. We explicitly avoid any bonus formula that would reward an employee for behavior that disadvantages clients (for example, shortcuts in settlement processing or misuse of client information for personal gain).
Governance of Remuneration: The Board or a designated Remuneration Committee oversees remuneration structures. They review compensation to ensure it does not encourage excessive risk-taking or conflict-bearing behavior. For senior management and key personnel, remuneration policies are reviewed at least annually to confirm they remain in line with regulatory expectations on conflicts of interest.
Future Remuneration Plans: If The Firm were to introduce performance-based remuneration, profit-sharing, or other incentive programs as it grows, we will assess those plans for potential conflicts. Any such plans will be structured (or capped) to avoid motivating employees to act contrary to clients’ best interests. For instance, if a trading desk is introduced in the future, traders’ bonuses would be structured with care to prevent conflicts with our settlement clients (and Chinese walls would separate trading from settlement). Similarly, any staff involved in advisory services would not be compensated in a way that could bias their advice in favor of the Firm’s own interests.

By implementing these remuneration safeguards, The Firm ensures that staff incentives remain aligned with acting in the best interest of clients, thereby upholding the MiCA requirement that pay structures do not compromise our duty to clients. All employees are also reminded that breaching conflict of interest policies for personal gain can lead to disciplinary action.

8. Disclosure of Conflicts of Interest

Transparency is a key element of our conflicts management. In line with Article 72(2) of MiCA, The Firm will disclose to clients and potential clients, in a prominent place on our website, the general nature and sources of conflicts of interest and the measures taken to mitigate them. The following outlines our approach to disclosure:

Public Disclosure on Website: We maintain a dedicated “Conflicts of Interest” section on our corporate website where we publish up-to-date information about this Policy. This disclosure includes a summary of this Policy, descriptions of the potential conflicts that are relevant to our services, and an overview of the key measures we take to prevent or manage those conflicts. This information is written in clear language for ease of understanding and is kept current. Whenever there is a material change to our conflict management approach (for example, if new services introduce new conflict risks), we will update the website disclosure promptly.
Client-Specific Disclosure: If a particular conflict of interest arises in relation to a specific client’s situation that is not sufficiently addressed by our general arrangements, we will inform that client (and any other affected clients) before carrying out any related service. This disclosure will be made in a durable medium (e.g., via email or written letter) and will outline the nature of the conflict, the risks it poses to the client, and the steps we have taken to mitigate it. The client will be given the opportunity to assess the conflict and, if required, consent to us proceeding despite the conflict. We emphasize that such targeted disclosure is a measure of last resort – our aim is always to manage conflicts internally – but we will not hesitate to be transparent with clients if a residual conflict remains.
Prominence and Accessibility: Whether on our website or in direct communications, conflict disclosures are presented prominently. On the website, the conflict of interest information is not hidden in fine print; it is accessible through a clearly labeled link on our homepage or in the main menu (e.g., under “Legal” or “Compliance Information”). In client communications, disclosures will be in plain language and highlighted, so they are not overlooked.
Content of Disclosure: Our disclosures (public or client-specific) will describe the general nature and sources of conflicts (for example, stating if the Firm’s group affiliates engage in related businesses, or if employees have outside interests) and the measures taken to mitigate them (for example, “we have an information barrier in place” or “the employee with the conflict is not involved in this transaction”). We aim for these descriptions to give clients confidence that we handle conflicts properly. We will not disclose any confidential details that would breach privacy or business secrecy, but we will provide enough detail for clients to make an informed judgment.

All such disclosures are recorded (with a copy of the communication or a record of the webpage content and date). Making conflict of interest information publicly available and directly available to clients when needed ensures we meet regulatory requirements and maintain trust with our client base.

9. Internal Controls and Record-Keeping

The Firm has implemented internal control mechanisms to ensure ongoing compliance with this Policy and to continuously monitor and document conflict of interest matters. Key controls and record-keeping practices include:

Conflicts of Interest Register: We maintain a Conflicts of Interest Register as a formal record of all identified conflicts. Each entry in the register includes details such as: the nature of the conflict, which clients or parts of the business are involved, the date it was identified, the assessment of its materiality, the actions taken to prevent or manage the conflict, and whether the conflict was disclosed to clients (and if so, when and how). This register is kept up-to-date by the Compliance Officer. Even potential conflicts that were identified and fully mitigated are logged, as this helps in monitoring patterns or emerging risk areas.
Roles and Responsibilities: The Compliance Officer (or designated compliance function) is responsible for the day-to-day monitoring of conflicts. This includes reviewing the conflicts register, evaluating new disclosures from staff, and checking that mitigation measures are effective. All employees, however, share responsibility: they must adhere to the procedures, report conflicts, and seek guidance when in doubt. Senior management must foster a culture of compliance and intervene when conflicts require managerial decisions (e.g. reassigning staff or declining business). The Compliance Officer provides guidance and training to staff on conflicts and serves as a point of contact for any conflict-related queries or reports.
Escalation Procedures: If a staff member detects a new or imminent conflict, they must immediately report it to the Compliance Officer (or their manager, who in turn informs Compliance). The Compliance Officer will investigate and, if the conflict is confirmed, determine the necessary steps to manage it. Material conflicts (for example, those that could significantly impact a client or the Firm’s reputation) are escalated to the Chief Executive and/or the Board. We have an escalation matrix that defines what kinds of conflicts or thresholds of risk necessitate higher-level intervention.
Monitoring and Review of Effectiveness: The Firm periodically reviews the effectiveness of its conflict of interest controls. The Compliance Officer conducts at least an annual assessment of the conflict management arrangements – reviewing incidents logged in the register, checking compliance with procedures, and identifying any areas for improvement. This includes testing whether employees are following the policy (e.g., through random checks or internal audits of transactions to ensure no favoritism) and verifying that disclosures, if any, were made appropriately. If the review finds any deficiencies or instances where the policy did not adequately manage a conflict, those findings are reported to senior management and the Board, and remedial actions are taken promptly (such as additional training, tightening of procedures, or revising the Policy).
Record Retention: All records related to conflicts of interest (the register, disclosures made, management decisions, training materials, etc.) are retained for at least the minimum period required by regulation (and in any case no less than [five] years). These records will be available for inspection by the competent authority upon request. Keeping thorough records demonstrates our compliance in practice and helps in historical analysis of conflict issues.
Incident Handling: In the event that a conflict of interest incident occurs (for example, if a conflict was not recognized in time and a client raises a concern or suffers detriment), the Compliance Officer will log the incident, investigate root causes, and report to the Board. An incident review will determine if additional controls or policy changes are needed to prevent a recurrence.

Through these internal controls and diligent record-keeping, The Firm can evidence its compliance with MiCA’s conflict of interest requirements at all times. The systematic logging and review of conflicts ensures accountability and continuous improvement of our conflict management framework.

10. Governance, Oversight and Review

Strong governance underpins the effective implementation of this Policy. The Firm’s Board of Directors and senior management exercise oversight to ensure that the Policy is not just a document but a living practice within the organization. Our governance and review arrangements are as follows:

Board Approval and Oversight: The Board of Directors (or equivalent governing body) is responsible for approving this Conflicts of Interest Policy and any material amendments to it. The Board sets the “tone from the top” that fair dealing and client interests come first. The Board (or a delegated committee) will receive periodic reports from the Compliance Officer on conflict of interest matters – including summary of the conflicts register entries, any serious conflicts that arose, and how they were handled. This oversight ensures that the highest level of the company remains informed and accountable for conflict management. If the Board finds any aspect of the conflict management framework lacking, it will direct management to address it promptly.
Periodic Policy Review: At minimum, this Policy is formally reviewed on an annual basis. A review is also triggered immediately upon any significant change in the Firm’s business model, service offerings, or remuneration structure (for example, if we launch a new service like custody or begin offering performance-based bonuses, as noted in Section 5). The Compliance Officer coordinates the review process, benchmarking our Policy against regulatory updates, industry best practices, and any guidance (such as Regulatory Technical Standards or opinions issued by ESMA under MiCA Article 72(5)). Any proposed changes from the review are submitted to the Board for approval.
Compliance Reporting: The Compliance Officer provides a compliance report at least annually (and ad-hoc as needed) that includes a section on conflicts of interest. This report will detail how effectively the Policy is functioning, note any breaches or waivers, and confirm whether appropriate disclosures were made in the prior period. It will also highlight if any new conflict trends are emerging as the business evolves. The Board reviews this report and will discuss and minute any decisions or recommendations (such as further training or resource allocation to compliance) to strengthen conflict management.
Independent Audits/Assessments: From time to time, the Firm may engage internal or external auditors to independently assess compliance with this Policy and the effectiveness of our conflict of interest controls. Findings from such audits are reported to senior management and the Board, and remediation plans are tracked to completion. This independent oversight adds an extra layer of assurance.
Accountability and Culture: Ultimately, governance of conflicts of interest is also about culture. The leadership of The Firm is committed to fostering a culture where ethics and client interests are paramount, and where employees feel comfortable reporting conflicts or unethical behavior. The Board and management communicate this message regularly. They also ensure that no employee or executive is exempt from these rules – conflicts of interest management applies equally from the top down. Any failures to comply with this Policy, especially at senior levels, are taken seriously and addressed decisively.

By establishing clear governance responsibilities and a schedule for review, The Firm ensures that this Conflicts of Interest Policy remains an effective and dynamic document. Board oversight and periodic reviews guarantee that as The Firm grows or as regulations evolve, our approach to managing conflicts of interest will be updated, improved, and rigorously enforced, in full alignment with MiCA and other applicable laws.