Cha & Kwon Law Offices provided comprehensive legal advisory services on the service structure, terms, and overall policies for a virtual asset project preparing to launch a non-custodial on-chain staking service. The model allowed users to stake tokens directly from their own electronic wallets and receive season-based rewards. Key review issues included: the risk that staked assets transferred to a separate storage contract could be viewed as a custodial service; the possibility that rewards might be misconstrued as interest or guaranteed returns; the absence of clear standards on who may intervene—and to what extent—in the event of security incidents such as hacking or protocol bugs; and compliance considerations relating to the handling of wallet addresses, on-chain transaction data, and restrictions for certain jurisdictions.

Cha & Kwon Law Offices conducted a detailed analysis of the technical architecture and developed an explanatory and operational framework grounded in a non-custodial on-chain staking model to prevent the service from being mischaracterized as “holding or managing users’ assets.” As the existing terms and conditions contained only general provisions, we proposed establishing a dedicated staking clause that clearly defines the service, sets out staking and unstaking procedures, specifies cooldown periods, explains the nature and calculation of rewards, outlines the scope of operator discretion, and delineates the conditions and limits for emergency security measures.

From a privacy and regulatory compliance perspective, we advised explicitly identifying wallet addresses and on-chain records related to staking, unstaking, and reward distribution as personal data collected. We also designed a foundational policy framework that includes geo-restrictions for jurisdictions such as the United States and sanctioned countries, access limitations required by local regulations, and public notice requirements regarding asset-return criteria upon service termination. Through these measures, the project was able to introduce its non-custodial on-chain staking service while mitigating key regulatory and dispute risks at an early stage and establishing a clearer, more transparent set of rules and guidance for users.