Background
The startup was building a B2B platform for incentives and gift cards, enabling companies to reward users and employees globally through digital vouchers and cross-border payouts. As the product expanded toward multi-currency settlement – including digital-asset payouts – and more complex transfer flows, the founders needed a scalable holding structure and a compliance framework suitable for operating under an EMI/regulated payments model across multiple jurisdictions.
Legal issues
A fast-growing gift card and incentives startup approached DRC to structure its corporate group and ensure regulatory compliance for cross-border payouts. The product roadmap included
- issuing and distributing stored-value instruments (gift cards / digital vouchers),
- enabling payouts in digital assets
- supporting fiat transfers and other payment flows that could fall within e-money regulation. The engagement required a clear regulatory perimeter analysis, licensing strategy (including EMI-related considerations), and contract architecture to operate lawfully across multiple jurisdictions.
Our role
- Designed a group and holding structure aligned with the startup’s business model, investor needs, and risk allocation between regulated and non-regulated activities.
- Conducted a regulatory perimeter assessment to map which product features constitute issuance of e-money, payment services, money remittance, custody-like functions, or crypto-asset services.
- Prepared a licensing & compliance roadmap, including EMI pathway options, outsourcing model, governance requirements, safeguarding of funds, and operational controls.
- Drafted the legal documentation suite for launch and scaling:
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- customer terms and product disclosures;
- merchant/partner agreements;
- agreements with PSPs, e-money partners, crypto on/off-ramp providers, and compliance vendors;
- AML/CFT and sanctions policies.
- Implemented a risk model for payment flows, digital-asset payouts, fraud and chargeback exposure, and consumer protection.
Key challenges
- Regulatory perimeter complexity: gift cards, incentives, and stored-value products can be regulated differently depending on whether the instrument is closed-loop or open-loop, transferable, redeemable for cash, or usable at third parties – requiring precise feature-by-feature legal qualification.
- EMI vs. partnership model: balancing speed-to-market via an EMI/PSP partner against long-term plans for obtaining an EMI authorisation, while keeping the architecture license-ready.
- Digital-asset payouts: integrating crypto payout capabilities without triggering unintended regulated roles, and ensuring AML/sanctions controls match risk levels and jurisdictions.
- Operational resilience: safeguarding, chargebacks, fraud prevention, dispute handling, and clear consumer disclosures had to be built into contracts and product flows from day one.
Outcome
- A launch-ready holding and operating structure that separated regulated and non-regulated functions and supported future fundraising and expansion.
- A documented regulatory strategy for payments and e-money features (including EMI options), with an implementation plan covering governance, safeguarding, outsourcing, and compliance controls.
- A full legal and contractual toolkit enabling cross-border payouts and digital-asset payout integrations with clear allocation of responsibilities among the startup, partners, and service providers.
- A practical risk model allowing the team to scale new corridors and product features while maintaining compliance and partner acceptance.
