NAVCoin AP Onboarding & Proof of Reserves Specification v1.0

gistfile1.txt

NAVCoin Authorized Participant (AP) Onboarding & Proof of Reserves Specification

Version 1.0
Status: Draft for Core Review
Author: Meech
Date: February 27, 2026

1. Authorized Participant (AP) Framework
1.1 Purpose

Authorized Participants (APs) are regulated institutional counterparties authorized to:

Mint NAVCoin via capital subscription

Redeem NAVCoin for underlying reserve assets

Provide liquidity and arbitrage alignment between NAVCoin NAV and market price

Interface institutional capital with Post Fiat smart contract infrastructure

The AP framework ensures institutional-grade compliance, capital sufficiency, and operational integrity.

1.2 Authorized Participant Eligibility Criteria
1.2.1 Legal Structure Requirements

APs must be one of the following:

SEC-registered Broker-Dealer

Registered Investment Adviser (RIA)

Trust Company

Regulated Bank or Credit Institution

Qualified Custodian

Regulated Digital Asset Firm

Must be domiciled in a FATF-compliant jurisdiction.

1.2.2 Minimum Capital Requirements
Category	Minimum Requirement
Regulatory Net Capital	$10,000,000 USD equivalent
Minimum Initial NAVCoin Subscription	$1,000,000 USD
Ongoing Minimum Position	$500,000 USD
Liquidity Buffer	10% of subscribed NAVCoin value held in liquid assets

NAVCoin Governance may adjust thresholds via DAO vote.

1.2.3 Operational Requirements

AP must demonstrate:

Institutional custody capability (qualified custodian or equivalent)

Segregated client account structure

Compliance department with named AML officer

On-chain operational capability (multi-sig wallet support preferred)

Insurance coverage for operational and custody risk

1.3 AP Rights & Obligations
Rights

Create (mint) NAVCoin at NAV

Redeem NAVCoin at NAV

Access institutional reporting dashboard

Participate in governance (if applicable)

Obligations

Maintain regulatory standing

Submit periodic compliance attestations

Abide by mint/redemption settlement timelines

Maintain wallet security and operational controls

2. Authorized Participant Onboarding Workflow
2.1 Application Submission

AP submits:

Corporate formation documents

Regulatory license documentation

Certificate of Good Standing

Organizational chart

UBO (Ultimate Beneficial Owner) disclosure

Audited financial statements (last 2 years)

AML/KYC policy documentation

2.2 KYC/AML Review

NAVCoin Compliance Team performs:

Sanctions screening (OFAC, EU, UK, UN)

PEP screening

Adverse media review

Beneficial ownership verification

Regulatory license verification

Approval requires Compliance Committee sign-off.

2.3 Legal Agreements

AP must execute:

Authorized Participant Agreement

NAVCoin Mint & Redemption Agreement

Risk Disclosure Statement

Smart Contract Interaction Disclosure

Data & Reporting Agreement

Agreements specify:

Settlement mechanics

Liability limitations

Arbitration venue

Jurisdiction

Termination clauses

2.4 Wallet Whitelisting

AP provides:

Institutional custody wallet address(es)

Multi-sig configuration (recommended 2-of-3 or higher)

NAVCoin governance contract:

Whitelists wallet addresses

Records AP ID mapping on-chain

Enables mint/redeem permissions

Whitelisting is revocable upon compliance breach.

2.5 Final Approval & Activation

Upon completion:

AP assigned unique ID

Wallet activated in NAVCoin Smart Contract

Reporting dashboard credentials issued

Initial subscription window opened

3. Proof of Reserves (PoR) Specification
3.1 Objective

Ensure 1:1 (or defined ratio) backing between:

Off-chain reserve assets

On-chain NAVCoin supply

Provide transparent, verifiable, and regularly updated reserve attestations.

3.2 Reserve Asset Categories

Permissible reserves:

U.S. Treasury Bills (≤ 12-month maturity)

Cash (FDIC-insured institutions)

Reverse repos (collateralized by Treasuries)

Money market funds (Treasury-only)

Prohibited:

Corporate debt

Equities

Crypto assets (unless explicitly approved by governance)

Illiquid private instruments

3.3 On-Chain Liability Definition

On-chain liability =

Total NAVCoin Supply
– Burned tokens
– Governance-locked tokens (if non-circulating)

Smart contract exposes:

Total supply

Circulating supply

AP minted supply

AP redeemed supply

3.4 Reconciliation Model
Daily Internal Reconciliation

Pull on-chain NAVCoin total supply.

Pull custodial statements from reserve custodian.

Calculate NAV per token.

Verify reserve coverage ratio ≥ 100%.

Coverage Ratio =
Total Reserve Market Value / NAVCoin Outstanding

Minimum acceptable ratio: 100%
Target ratio: 102% (buffer)

3.5 Reporting Frequency
Report Type	Frequency
Internal Reconciliation	Daily
Public Dashboard Update	Daily
Third-Party Attestation	Monthly
Full Financial Audit	Annual
3.6 Public Transparency Dashboard

Public dashboard must display:

Total NAVCoin supply

Total reserve value

Asset allocation breakdown

Coverage ratio

Timestamp of last update

Attestation reports (PDF links)

All reserve reports must include:

Custodian name

Account confirmation

Independent CPA attestation

Digital signature hash

3.7 Merkle Proof (Optional Advanced Layer)

NAVCoin may implement:

Merkle tree snapshot of liabilities

On-chain hash anchoring

Third-party cryptographic verification

This enables public cryptographic verification of liabilities.

4. Capital Deployment & Redemption Mechanics
4.1 Mint (Creation) Process

Step 1: AP submits subscription request.
Step 2: AP wires USD to designated custodian account.
Step 3: Custodian confirms receipt.
Step 4: NAVCoin operations confirms reserve allocation.
Step 5: Smart contract mints NAVCoin to AP wallet.

Mint price = NAV per token (T+0 or T+1 settlement).

4.2 Redemption Process

Step 1: AP submits redemption notice.
Step 2: AP transfers NAVCoin to burn address.
Step 3: Smart contract verifies and burns tokens.
Step 4: Custodian releases corresponding USD.
Step 5: Funds wired to AP settlement account.

Redemption settlement: T+1 standard.

4.3 Smart Contract Controls

Contract enforces:

Minting only by whitelisted AP wallets

Redemption only from whitelisted AP wallets

Supply cap (if applicable)

Emergency pause functionality

Governance override controls

All contract changes require multi-sig + governance approval.

4.4 Liquidity & Arbitrage Function

APs are incentivized to:

Mint when NAVCoin trades above NAV

Redeem when NAVCoin trades below NAV

This stabilizes price and maintains peg integrity.

5. Risk Management Framework
5.1 Key Risks

Custodian failure

Smart contract vulnerability

Regulatory change

Liquidity mismatch

Operational fraud

5.2 Mitigations

Tier-1 custodians only

Multi-sig governance

Third-party smart contract audits

Daily reconciliation

Capital buffer (≥2%)

Insurance coverage

6. Governance & Amendments

This specification may be amended by:

Core Team Proposal

Governance Vote (if DAO enabled)

Regulatory requirement updates

All changes must be versioned and publicly archived.

7. Conclusion

This specification establishes:

Institutional-grade AP onboarding

Transparent Proof of Reserves methodology

Defined mint/redemption mechanics

Risk-controlled bridge between TradFi and Post Fiat

NAVCoin is structured to meet institutional standards while preserving on-chain transparency and capital efficiency.