# Legal

Energy trading through Non-Fungible Tokens (NFTs) represents an innovative intersection of the energy market and blockchain technology. This documentation examines the legal aspects that underpin the viability of energy trading using NFTs. By addressing critical legal considerations, stakeholders can gain a comprehensive understanding of the legal framework that enables and governs this emerging approach.



## **Legal considerations in energy trading through FNFTs**

**Smart Contracts and Binding Agreements:** NFTs can be created through smart contracts, which are automated and self-executing digital agreements. These contracts establish the parameters for energy trading transactions, encompassing elements like payment, delivery, and the transfer of ownership. The execution of smart contracts generates an indisputable and tamper-resistant record of the involved parties' intentions and activities, thereby augmenting transparency and legal enforceability.&#x20;

\-- The NFT for the collection is encapsulating a promise of royalties and does not hold any other agreements except those outlined in the terms and conditions.



**Digital Ownership and Transfer:** NFTs facilitate the representation of ownership and transfer for distinct digitales assets. From a legal standpoint, NFTs can serve as proof of ownership and entitlements linked to energy commodities. This enables transactions that are secure and verifiable, bypassing the need for conventional intermediaries.

\-- As a mutual agreement between third parties, it operates as a private contract wherein two parties establish terms. -- These contracts are transferable through blockchain technology, which ensures traceability and security in transactions, prerequisites for validating ownership. -- Mexican regulation is receptive to this kind of technology and is, in fact, open to its adoption.



**Intellectual Property Rights:** Energy NFTs may introduce intellectual property considerations, such as copyrights or trademarks linked to the digital renditions of energy assets. Clear licensing terms and agreements can effectively handle matters related to the utilization, dissemination, and replication of NFTs to avert potential infringement while safeguarding the interests of creators and purchasers.

\-- The intellectual property related to the cover image of the NFT rests with the owner of the NFT.&#x20;

\-- Intellectual property encompassing the business model, names, slogans, purchased assets, and any project infrastructure pertains to the **SERVICIOS Y DESARROLLOS MTMX SRL de CV**

\-- Ownership of the generated royalties lies with the NFT owner.



**Regulatory Compliance:** Effectively navigating energy regulations, environmental standards, and trading regulations is of paramount importance. When engaging in energy trading via NFTs, it is imperative to adhere to the regulatory frameworks governing energy markets, emissions trading, and environmental certifications to ensure complete legal compliance.

\-- The regulatory jurisdiction pertains to Mexico.&#x20;

\-- For any clarifications or negotiations, an arbitration process will be initiated as a primary avenue for resolution, facilitated by a private entity named BEIOIN CONSULTING SC. This legal entity specializes in fintech and blockchain matters.&#x20;

\-- Subsequently, if the parties remain in disagreement, recourse may be sought in any court located within Mexico City.&#x20;

\-- The company guarantees the presence of a compliance officer who will sign off on quarterly reports, affirming the accuracy of the reports and transactions.&#x20;

\-- The partners of the company and project administrators are not held accountable for activities beyond their designated roles or those defined within the compliance framework.



**Contractual Clarity and Terms:** Thoroughly crafted NFT contracts should clearly delineate the rights and obligations of all involved parties, encompassing aspects such as energy specifications, pricing structures, delivery mechanisms, and any associated environmental attributes. The use of explicit contractual language is instrumental in mitigating potential disputes and ensuring a comprehensive understanding of each party's responsibilities.

\-- The glossary provided within this documentation shall serve as the authoritative reference for terms used.&#x20;

\-- English shall be the language of choice for all contracts, maintaining consistency even if translated into other languages.&#x20;

\-- For any queries pertaining to contract-related matters, please refer to the designated arbitrator and consultant specializing in blockchain contracts at [www.beiion.mx](http://www.beiion.mx/). This resource is readily available to address any inquiries related to the contracts associated with the NRG collection.



**Data Privacy and Security:** Energy trading involves handling sensitive data, including consumption patterns and payment information. Adherence to data protection laws, such as GDPR or HIPAA, is imperative to ensure the safeguarding of user information and the preservation of legal compliance.

\-- No personal information related to behavior, preferences, or tastes will be collected by the collection or the purchasing platform. -

\- The only information gathered by the protocol pertains to the wallet where royalties will be sent from generated proceeds.&#x20;

\-- In the event of app access via a username and password, the app retains the user's email address, never the collection.&#x20;

\-- For purchases exceeding 5,000 MXN, the person's name will be collected. -- For purchases surpassing 10,000 MXN, legal identification (INE), email address, and name of the individual will be gathered.&#x20;

\-- For purchases exceeding 20,000 MXN, legal identification (INE), email address, name of the individual, and bank statements will be collected.



## Compliance with energy and NFT regulations

INDUSTRY LAWS INFORMATION:

ELECTRIC INDUSTRY LAW (LIE): Article 1.- This Law regulates the planning and control of the National Electric System, the Public Service of Electric Energy Transmission and Distribution, and other activities of the electric industry, in accordance with the fourth paragraph of Article 25, the sixth paragraph of Article 27, and the fourth paragraph of Article 28 of the Political Constitution of the United Mexican States. The provisions of this Law are of social interest and public order.

The purpose of this Law is to promote the sustainable development of the electric industry, ensure its continuous, efficient, and safe operation for the benefit of users, as well as compliance with public service and universal service obligations, clean energy, and the reduction of polluting emissions.

Article 2.- The electric industry encompasses activities related to the generation, transmission, distribution, and commercialization of electric energy, as well as the planning and control of the National Electric System and the operation of the Wholesale Electricity Market. The electric sector includes the electric industry and the supply of primary inputs for this industry. The activities of the electric industry are of public interest.

The planning and control of the National Electric System, as well as the Public Service of Electric Energy Transmission and Distribution, are strategic areas. The State will maintain ownership of these matters, although it may enter into contracts with private individuals in accordance with this Law. Basic Supply is a priority activity for national development.

Link to LIE: [https://www.diputados.gob.mx/LeyesBiblio/pdf/LIElec.pdf ](https://www.diputados.gob.mx/LeyesBiblio/pdf/LIElec.pdf)

MARKET RULES: The Market Rules are a regulatory framework comprising general administrative provisions containing the design and operation principles of the Wholesale Electricity Market, including the auctions referred to in the Electric Industry Law.

The Wholesale Electricity Market is operated by CENACE, where individuals entering into the respective contract with that entity in the Generator, Marketer, Supplier, Non-Supply Marketer, or Qualified User category can engage in transactions for the purchase and sale of electric energy, Ancillary Services, Power, Financial Transmission Rights, Clean Energy Certificates, and other products necessary for the operation of the National Electric System.

The Wholesale Electricity Market must adhere to the Market Rules and the Market Operating Provisions, which collectively constitute the Market Regulations. In addition to establishing procedures for the aforementioned transactions, the Market Regulations must define the minimum requirements for Market Participants, determine the rights and obligations of Market Participants, specify how Transporters and Distributors should coordinate their activities for the operation of the Wholesale Electricity Market, and establish mechanisms for dispute resolution.

Link to Market Rules:&#x20;

[https://www.dof.gob.mx/nota\_detalle.php?codigo=5407715\&fecha=08/09/2015#gsc.tab=0](https://www.dof.gob.mx/nota_detalle.php?codigo=5407715\&fecha=08/09/2015#gsc.tab=0)

QENERGY INFORMATION: Qenergy is a market participant generator that plays an active role in supplying electricity directly to large users, Qualified Suppliers, and Non-Supply Marketers. Qenergy holds a market participant contract with CENACE, authorizing it to conduct electric energy operations and related products.

Market participant contract: **GEN-088-JUN-2019** Currently, Qenergy transacts more than 100 MW every hour.

Website link: [https://qenergy.mx/](https://qenergy.mx/)
