16 October 2016

KWM Firsts - Leaders in innovative currency

In paving a way to a new global financial democracy, Recipco established a unique global system for the use of a virtual currency, or unit of exchange called an ECO (Enterprise-backed Credit Obligations). This new unit of currency will allow members of The ECO Capacity Exchange (the Exchange) to use ECO to trade goods and services without the need to use traditional currency. The system is the first of its kind and enables participants to utilise excess capacity efficiently, and to account for transactions at divergent values.

King & Wood Mallesons (KWM) assisted Recipco on all legal and regulatory aspects of structuring and establishing the Exchange, the world’s first global trading platform allowing members to trade their excess capacity (of goods and services) using ECO as a unit of account and medium of exchange.

As the Exchange is such a unique concept, we were required to conduct significant analysis into the legal nature of an ECO, and to provide detailed advice on the various structuring options for the legal entities involved. We worked closely with the client to conceptualise and document how an ECO transaction progresses on the Exchange.

The fundamental rationale behind ECO’s creation comes from the fact that many of the world’s assets are held by organisations and geographies that are unable to trade with the same ease in today’s global markets as larger multinationals. Their lack of access to liquid assets can therefore be a barrier to market entry and this is reflected in the socio-economic development of those countries.

Therefore, in order for the concept to work, we had to create a structure whereby the value of ECOs at the point of issuance will be referenced to a basket of major currencies. Thereafter the value of the ECOs will be determined by the prices that the members are prepared to pay for goods and services from other members, thus putting ECO and the members of the Exchange at the heart of a new, global financial democracy.

The advisory work also relied heavily on the firm’s expertise as thought leaders in blockchain, which although not used in the Exchange, formed some of the fundamental principles behind the Exchange’s creation as an entity to create and lend ECO, trade goods and services for ECO, and to establish a credit reserve fund to underwrite the financial stability of the system.

The ECO now exists as a trustworthy, low-risk currency that is a credible substitute for traditional currencies, eliminating factors such as geographic limitations, foreign exchange fluctuations and speculative risk. The ECO Capacity Exchange is a simple idea that has been made possible following the engagement of a network of global supporters and advocates, including over 200 multinational corporations, agencies of the United Nations and the UK and Chinese Governments.

ECO it is the only non-monetary collaborative currency in existence and its creation has helped lead the charge in the application of collaborative currencies where both issuance and redemption of currency relies on freely collaborating citizens or firm. It also enables economic collaboration when there isn't sufficient national money in circulation to complete a transaction or reward an activity.

Lead partners:

Tim Bednall, KWM London

Andrew Wingfield, KWM London

Tim Dolan, KWM London

Lorraine Vaz, KWM London

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