Additional Disclosures

Overview

Last updated: October, 31 2025

IMPORTANT NOTICE: Rails Markets Inc., an affiliate of Rails Limited, is registered with the National Futures Association (NFA) and is subject to the NFA’s regulatory oversight only with respect to digital asset perpetual futures. The NFA does not regulate underlying or spot virtual currency products, transactions, exchanges, custodians, or markets.

Before completing your first digital asset perpetual futures transaction, you will receive the following disclosures which are detailed below:

  • The NFA Investor Advisory – Futures on Virtual Currencies Including Bitcoin, and
  • The CFTC Customer Advisory – Understand the Risks of Virtual Currency Trading.

    • Please note that digital assets are volatile, subject to cyber risks, and may have uncertain or fluctuating valuations. The use of smart contracts carries the risk of code errors or potential breaches. You should carefully assess your risk tolerance before engaging in any digital asset perpetual futures trading activity.

    General Risk Statement (Applicable to All Users)

  • General Disclosure: Trading virtual assets, derivatives, forex, and commodities carries significant risk. Prices are highly volatile, and investors may lose all invested capital. Past performance is not indicative of future results, and clients are encouraged to seek independent legal advice before trading.
  • Market and Volatility Risk: Market prices fluctuate rapidly due to macroeconomic events, regulatory changes, technological developments, and sentiment. Liquidity may be limited, affecting the ability to execute or settle trades at desired prices.
  • Leverage and Margin Risk: Users using leverage may face margin calls and liquidation of positions, and losses may exceed invested capital. Clients must understand the risks before engaging in leveraged trading.
  • Technology and Cybersecurity Risk: Rails’ platform relies on smart contracts, distributed ledger technologies, and proprietary engines, which may be vulnerable to malfunction, cyberattacks, or network disruptions. While multi-signature, multi-party computation, or other security protocols are implemented, no system is guaranteed immune to failure.
  • Counterparty and Custody Risk: Users bear operational risks related to the custody of their assets, including risks associated with third-party infrastructure, blockchain protocols, oracles, and smart contracts. Settlement and collateral protections depend on blockchain finality.
  • Operational and Outsourcing Risk: Certain functions are outsourced to affiliates or third-party providers. Service-level agreements and oversight procedures are in place; however, delays, errors, or disruptions may occur.
  • Conflicts of Interest: Users are informed of potential conflicts arising from fees, commissions, or arranging activities. Rails maintains policies to manage, mitigate, and disclose conflicts in compliance with SIBA, VASPA, and CIMA requirements.
  • Investor Suitability and Responsibility: Users must undergo suitability assessments and acknowledge risks before gaining access to the platform. Users confirm that they understand the risks and accept responsibility for trading decisions.
  • Limitation of Liability: Rails Limited excludes liability for losses. Nothing in this disclosure limits liability where prohibited by law.
  • Regulatory Status Disclaimer: Rails Limited is licensed under SIBA and registered under VASPA. Services are only offered to eligible clients outside the Cayman Islands where permitted by law, and Rails does not solicit services to the public in the Cayman Islands.
  • Updates to Risk Profile: Users are required to review and re-acknowledge risk disclosures periodically. If your financial circumstances change, you must notify the Rails team so we can re-evaluate your profile. Rails Limited retains records of all acknowledgements for audit purposes. Non-compliance may result in temporary restrictions until acknowledgment is received.
  • Additional Risk Disclosures: Rails Limited will include such additional risk disclosures as may be deemed appropriate or otherwise required from time to time.

    • U.S. Regulatory Disclosures

    Rails is required to inform US retail applicants about the risks of trading digital asset perpetual futures as a company registered with the National Futures Association (NFA). Please see the direct advisories from the NFA and Commodity Futures Trading Commission (CFTC) below.

    NFA Investor Advisory

    URL: https://www.nfa.futures.org/investors/investor-advisory-virtual-currency.html

    December 1, 2017

    The purpose of this investor advisory is to remind investors that, just like any other speculative investment, trading futures on virtual currencies, including Bitcoin, have certain benefits and various risks. While futures on virtual currencies must be traded on regulated futures exchanges, trading these products involves a high level of risk and may not be suitable for all investors.

    It is critical, therefore, for investors who are considering trading virtual currency futures to educate themselves about these products, understand their risks, and conduct due diligence before making investment decisions. Investor protection begins with investor education.

  • Conduct due diligence on any individuals and firms soliciting for an investment in futures on virtual currencies including Bitcoin by checking their Commodity Futures Trading Commission (CFTC) registration status, NFA membership status, and background using NFA's BASIC system or calling NFA's Information Center at 800-621-3570.
  • Virtual currencies including Bitcoin experience significant price volatility, and fluctuations in the underlying virtual currency's value between the time you place a trade for a virtual currency futures contract and the time you attempt to liquidate it will affect the value of your futures contract and the potential profit and losses related to it. Be very cautious and monitor any investment that you make.
  • Be aware of sales pitches offering investment schemes that promise significant returns with little risk or that encourage you to "act now." If an investment sounds too good to be true (e.g., high returns, guaranteed to perform in a certain way), then it probably is.
  • Virtual currency futures contracts are bought and sold using initial margin money that can enable you to hold a virtual currency futures contract valued more than your initial investment. This is referred to as leverage. If the price of the futures contract moves in an unfavorable direction, the leveraged nature of the futures investment can produce large losses in relation to your initial investment. In fact, even a small move against your position may result in a large loss, including the loss of your entire initial deposit, and you may be liable for additional losses.
  • Be aware of the risk of Ponzi scheme operators and fraudsters seeking to capitalize on the current attention focused on virtual currencies, including Bitcoin.

    • Outlined above are just some of the risks associated with trading futures on virtual currencies, including Bitcoin. Investors should consult the risk disclosures provided by their FCM and fully educate themselves on all of the associated risks before trading.

    With CFTC oversight, each futures exchange listing a virtual currency futures contract is responsible for regulating its futures market. NFA performs market regulation services on behalf of certain futures exchanges and swap execution facilities. Please be aware, however, that just because futures on virtual currencies, including Bitcoin, must be traded on regulated futures exchanges does not mean that the underlying virtual currency markets are regulated in any manner, and as discussed above what occurs in a virtual currency's underlying market will impact the price of a virtual currency's futures contract

    Investors with questions or concerns regarding trading futures on virtual currencies including Bitcoin should contact NFA's Information Center (312-781-1410 or 800-621-3570 or information@nfa.futures.org).

    CFTC Customer Advisory

    URL: https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/understand_risks_of_virtual_currency.html

    The U.S. Commodity Futures Trading Commission (CFTC) is issuing this customer advisory to inform the public of possible risks associated with investing or speculating in virtual currency spot or futures and options markets.

    Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Virtual currencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies. Profits and losses related to this volatility are amplified in margined futures contracts.

    For hedgers – those who own bitcoin or other virtual currencies and who are looking to protect themselves against potential losses or looking to buy virtual currency at some point in the future – futures contracts and options are intended to provide protection against this volatility. However, like all futures products, speculating in these markets should be considered a high-risk transaction.

    Bitcoin is a Commodity

    Bitcoin and other virtual currencies have been determined to be commodities under the Commodity Exchange Act (CEA). The Commission primarily regulates commodity derivatives contracts that are based on underlying commodities. While its regulatory oversight authority over commodity cash markets is limited, the CFTC maintains general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce.

    What makes virtual currency risky?

    Purchasing virtual currencies on the cash market – spending dollars to purchase Bitcoin for your personal wallet, for example – comes with a number of risks, including:

  • Most cash markets are not regulated or supervised by a government agency;
  • Platforms in the cash market may lack critical system safeguards, including customer protections;
  • Volatile cash market price swings or flash crashes;
  • Cash market manipulation;
  • Cyber risks, such as hacking or phishing attempts; and/or
  • Platforms selling from their own accounts and putting customers at an unfair disadvantage.

    • It’s also important to note that market changes that affect the cash market price of a virtual currency may ultimately affect the price of virtual currency futures and options.

    When customers purchase a virtual currency-based futures contract, they may not be entitled to receive the actual virtual currency, depending on the particular contract. Under most futures contracts currently being offered, customers are buying the right to receive or pay the amount of an underlying commodity value in dollars at some point in the future. Such futures contracts are said to be “cash settled.” Customers will pay or receive (depending on which side of the contract they have taken – long or short) the dollar equivalent of the virtual currency based on an index or auction price specified in the contract. Thus, customers should inform themselves as to how the index or auction prices used to settle the contract are determined.

    Entering into futures contracts through leveraged accounts can amplify the risks of trading the product. Typically, participants only fund futures contracts at a fraction of the underlying commodity price when using a margin account. This creates “leverage,” and leverage amplifies the underlying risk, making a change in the cash price even more significant. When prices move in the customers’ favor, leverage provides them with more profit for a relatively small investment. But, when markets go against customers’ positions, they will be forced to refill their margin accounts or close out their positions, and in the end may lose more than their initial investments.

    Beware of related fraud

    Virtual currencies are commonly targeted by hackers and criminals who commit fraud. There is no assurance of recourse if your virtual currency is stolen. Be careful how and where you store your virtual currency. The CFTC has received complaints about virtual currency exchange scams, as well as Ponzi and “pyramid” schemes.

    If you decide to buy virtual currencies or derivatives based on them, remember these tips:

  • If someone tries to sell you an investment in options or futures on virtual currencies, including Bitcoin, verify they are registered with the CFTC.
  • Remember—much of the virtual currency cash market operates through Internet-based trading platforms that may be unregulated and unsupervised.
  • Do not invest in products or strategies you do not understand.
  • Be sure you understand the risks and how the product can lose money, as well as the likelihood of loss. Only speculate with money you can afford to lose.
  • There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.
  • Investors should conduct extensive research into the legitimacy of virtual currency platforms and digital wallets before providing credit card information, wiring money, or offering sensitive personal information.
  • The SEC has also warned that some token sales or initial coin offerings (ICOs) can be used to improperly entice investors with promises of high returns.1

    • If you believe you may have been the victim of fraud, or to report suspicious activity, contact us at 866.366.2382 or visit CFTC.gov/Complaint.

    1 See https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings.

    The CFTC has provided this information as a service to investors. It is neither a legal interpretation nor a statement of CFTC policy. If you have questions concerning the meaning or application of a particular law or rule, consult an attorney.

    International Risk Disclosure (Non-U.S. Users)

    For clients outside the United States, Rails Limited and its affiliates provide equivalent disclosures under applicable local laws and regulators expectations.

    While specific protections may vary across jurisdictions, users should understand that:

  • Virtual asset markets are often unregulated or lightly regulated, which can lead to increased risk of fraud, operational failures, or price manipulations.
  • Leveraged trading and perpetual futures can magnify both gains and losses, and you may lose more than your initial investment.
  • Custody and settlement of digital assets is evolving and may change in ways that affect your holdings or trading activity
  • You should independently assess whether such products are appropriate given your financial objectives, experience, and risk tolerance.