🗞️Legal

Ownership of the Underlying Asset

Fractible NFTs operate similarly to many asset-backed tokens. While legal ownership of the underlying asset (real estate in this case) technically remains with the token issuer, the beneficial ownership is transferred along with the Fractible itself.

This means:

• Fractible holders are considered the owners of the asset. Owning the Fractible token in your wallet essentially grants you beneficial ownership rights.

• Simplified taxation: This structure simplifies tax implications for both Fractit and its users.

• Analogy to stablecoins: Consider USD-backed stablecoins. While the legal ownership and custody of the underlying USD remains with the issuer, the token holder can, at any time, redeem their stablecoin and claim the USD equivalent.

Similarly, Fractible holders retain the right to redeem their tokens at any time and become the legal owner of the underlying asset. This process involves changing the status of the Fractible NFT and taking full possession of the physical object (for real world assets) or, in the case of real estate, assuming ownership through the associated Special Purpose Vehicle (SPV).

Fractit Audits

Smart Contract Security:

• Fractit's token contracts will undergo an extensive security audit by a third-party firm. This audit employed a combination of static analysis, automated tools, and manual review to identify and address potential vulnerabilities. While offering enhanced security, users interacting with these contracts should still exercise caution and acknowledge inherent risks.

• Fractible smart contracts have been internally reviewed and tested, and are currently pending further external audit.

Fractit Trustee Audits:

To ensure transparency and maintain user trust, Fractit Trustee will undergo annual audits. These audits will focus on:

• Provenance: Verifying the origin and legitimacy of offered goods.

• Supply Chain Integrity: Evaluating the security and ethical practices within the supply chain.

• Financial Flows: Tracing the movement of funds from buyers to suppliers.

• Physical Asset Reconciliation: Confirming that the quantity and details of physical goods precisely match the corresponding Fractible minted.

The findings of these audits will be made publicly available for user reference.

Fractit KYC Requirements

• Fractible Purchase and Redemption: Fractit requires Know Your Customer (KYC) verification for all NFT purchases and redemptions. This procedure helps mitigate potential risks and ensures compliance with relevant regulations.

• Peer-to-Peer Trading: KYC is not mandatory for users engaging in peer-to-peer Fractible token trading through decentralized smart contracts. These contracts, overseen by the DAO and Fractit token holders, operate outside the control of Fractit Labs or Fractit Trustee. However, only successfully KYC-verified buyers can claim rental income and access other platform features. We also strongly advise against peer-to-peer trading to safeguard our customers and prevent scams.

It's important to note that while KYC is not required for decentralized P2P trading, users should exercise caution and conduct their own due diligence when engaging in such transactions.