Regulations
Debt instruments are regulated under different legal frameworks and their jurisdictions.
The D-ASA ensures efficient execution of the debt instrument in the "best case scenarios", where it offers the highest improvements on cost and time efficiency if compared to the traditional, manual, and labor-intensive contracts.
The D-ASA provides methods to comply with regulatory obligations, allowing the management of the "worst case scenarios", in which the intervention of the authority or the regulator is necessary.
Suspension
Debt instruments can be temporarily suspended due to regulations or operational reasons.
Asset Suspension
The D-ASA MAY suspend all:
- Payments;
- D-ASA units transfers.
The asset suspension status MUST be set with the set_asset_suspension_status
method.
Account Suspension
The D-ASA MAY suspend account:
- Payments (skipped on due dates);
- D-ASA units transfers (from and to).
The account suspension status MUST be set with the set_account_suspension_status
method.
Default
Debt instruments are exposed to default risks.
Default is the failure to pay the lenders according to the payment obligations.
Default processes require the intervention of regulatory bodies and courts, therefore the D-ASA default status bridges the default process off-chain.
The D-ASA SHOULD enter default status if it cannot perform payments on due dates.
The D-ASA MAY disable all non-administrative methods on default status.
The D-ASA default can be called either automatically (based on program conditions) or manually (based on the decision of a trustee).
The default status MAY be set with the OPTIONAL set_default_status method.
📎 EXAMPLE
A D-ASA coupon payment is triggered on due date, but there is not enough liquidity to pay all the investors. The D-ASA contract automatically enters in default immediately.
📎 EXAMPLE
A D-ASA coupon payment is triggered on due date, but there is not enough liquidity to pay all the investors. The D-ASA program increments a failed payments counter and waits 3 hours to retry. If the D-ASA has three failed payments in a row, then the contract automatically enters in default.
📎 EXAMPLE
A D-ASA coupon payment is triggered on due date, but there is not enough liquidity to pay all the investors. The D-ASA contract relies on a trustee to call the default.