Newrails Euro (EURW)
Euro Stablecoin Whitepaper
E-Money Token

Authorised Management Board:

1. Tomas Tourlet - member
2. Audrius Radišauskas - member
3. Vytautas Valvonis - Chairman

Authorised Supervisory Board:

1. Mark Duncan
2. John Eyres
3. Mervyn Jacob

The business address of these boards is: Švitrigailos str. 11C, LT-03228, Vilnius, Lithuania.

Newrails is licensed as an Electronic Money Institution (EMI) under Lithuanian law and regulated by BoL. Our primary business activities include the issuance of electronic money, payment processing, and providing digital payment solutions to both individuals and businesses across the European Union and internationally.

The Electronic Money Institution license authorises Newrails to provide the following services that are listed in the license:

• Issuing of electronic money
• Issuing and redemption of electronic money
• Execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders (Article 5(3) of the Lithuanian Law on Payments)
• Issuing of payment instruments and/or acquiring of payment (Article 5(5) of the Lithuanian Law on Payments)

Newrails also provides custody and administration of crypto-assets on behalf of clients with reference to Regulation (EU) 2023/1114, article 60.

Newrails acts as the issuer of EURW. Newrails also acts as a payments and account provider. To redeem EURW it is necessary to have successfully opened an account with Newrails. The minting and burning processes are conducted through the Hedera Network. EURW may be extended and offered via other networks in the future, subject to technical due diligence, market adoption, and risk assessment.

Typhoon Wealth Group Limited is the ultimate holding company of Newrails. There is the potential for conflicts of interest to exist:

• Shareholder Influence and Lack of Independence: The Supervisory Board, with a majority of shareholder representatives, risks prioritising Typhoon Wealth Group's interests over compliance and financial stability, potentially undermining objective oversight.
• Profit Maximisation vs Compliance: A focus on shareholder returns could divert resources away from critical compliance functions, such as AML/KYC, cybersecurity, and capital adequacy, risking regulatory non-compliance.
• Related-Party Transactions and Dividends: Preferential treatment in intercompany dealings or aggressive dividend policies might compromise Newrails's financial health and raise regulatory concerns.
• Strategic Alignment Risks: Shareholder-driven decisions may push Newrails towards high-risk strategies, misaligned with its operational and regulatory priorities.

These risks are mitigated by:

• Ensuring the Management Board operates independently and non-executive members are appointed.
• The Supervisory Board has clear roles and responsibilities focusing on compliance and risk oversight and consists of a majority of non-executive members.
• Upholding strict policies for related-party transactions, supported by third-party audits and disclosures. Policies will be regularly reviewed and updated.
• Clearly defining risk appetite framework for acceptable risk aligned with regulatory and operational goals.
• Finally, the key asset of Typhoon Wealth is Newrails; it is counter-intuitive that the shareholders and directors of Typhoon Wealth would not act in the best interests of Newrails.

Financial Health and Capital Resilience. Newrails has maintained healthy capital reserves, which support the full backing of its Euro E-money tokens and ensure robust financial stability for future expansions. While the company is still in its early stages, Newrails's operational and regulatory compliance expenses are managed effectively, enabling stability of operations. Audited financial statements are filed annually with relevant regulatory authorities. Growth and Operational Improvements. Newrails anticipates significant revenue growth as the adoption of e-money tokens accelerates and as Newrails expands its customer base. Capital Resources and Cash Flow. Newrails enjoys a strong liquidity position, with sufficient short- and long-term capital resources to support ongoing operations and planned growth initiatives. Primary capital sources are provided by the Group Holding Company ensuring robust support for growth initiatives and regulatory capital requirements. Detailed Financial Situation. The financial position of Newrails reflects stability, consistent performance growth, and robust shareholder support. Stability is a cornerstone of Newrails's financial foundation. Over the past three years, the authorised capital has remained steady at €450,000. Additionally, reserves have demonstrated a strong upward trajectory, increasing from €500,000 in 2021 to €1,000,000 in 2022, €1,305,600 in 2023, €1,986,870 in 2024 and €3,060,938.67 in 2025.

The revenues in the past 3 years were €23,285 in 2022, €76,726 in 2023, €84 808 in 2024, €16,520.40 in 2025 The company has reported net losses during this period, €291,756 in 2021, €428,251 in 2022, €387,629 in 2023, €632,934 in 2024 and €699,330.94 in 2025. This reflects ongoing investments in team expansion and hiring experienced professionals, product development, IT systems and system security, improvements in operational processes and establishment of new partnerships which are expected to generate returns in the near future. Shareholder support from Typhoon Wealth Group Limited has been instrumental in underpinning Newrails's strategic vision. Since becoming the sole shareholder in January 2023, Typhoon has provided over €1,575,622 in ongoing financial support, demonstrating its commitment to Newrails's long-term growth and operational success.

The Newrails Euro or [EURW] is a Euro pegged E- Money token designed to provide a stable digital asset for use in payments. It is non-interest bearing. The token will be issued on a secure blockchain platform and will be fully backed by Euro reserves held in segregated accounts at regulated financial institutions. Each Newrails Euro token will be redeemable instantly at par value (1:1) for fiat Euro.

ESMA Register: per requirements under Article 109 (para 4) of MICA:

1. The name, legal form and legal entity identifier of the issuer: Newrails UAB, LEI: 875500AX7AO0XVYSQD64
2. The commercial name, physical address, telephone number, email and website of the issuer: Newrails UAB, Švitrigailos str. 11C, LT-03228. Vilnius. Lithuania. +370 644 44698, eurw@newrails.xyz www.newrails.xyz
3. The crypto-asset white papers and any modified crypto-asset white papers, with the out-of-date versions of the crypto-asset white paper kept in a separate archive and clearly marked as out-of-date: White paper enclosed
4. The starting date, or, if not available at the time of the notification by the competent authority, the intended starting date, of the offer to the public or the admission to trading: 12 January, 2026
5. Any other services provided by the issuer not covered by this Regulation, with a reference to the applicable Union or national law: Newrails provides services as an Electronic Money Institution, license #69, as authorised by the Bank of Lithuania. It is supervised by the Bank of Lithuania.
6. The date of authorisation as a credit institution or as an electronic money institution and, where applicable, of withdrawal of that authorisation: 4th June 2020

EURW will be classified as an Electronic Money Token pursuant to MiCA, a type of crypto asset the main purpose of which is to be used as a means of exchange and that purports to maintain a stable value by referring to the value of a fiat currency that is legal tender. In the case of EURW, the legal tender against which it is referenced is the Euro.

1. User Protection and Safeguarding of Assets

   EURW will be issued and redeemed by Newrails and the underlying safeguarded funds and assets will be held in regulated financial institutions within the European Union. Upon the transfer of funds to Newrails, a distinct safeguarding relationship is established, and said funds are held for the exclusive benefit of the principals, being the account holders and the holders of the EURW token. Under this arrangement, the safeguarding institutions confer upon the account and token holders' the right to redeem their claims at par value (i.e., 1:1) against the issuer. This structure provides for the full segregation of the funds within designated safeguarding institutions, which is expressly dedicated to supporting the value of the EURW. Such funds are thereby segregated from the assets and activities of Newrails and are reserved solely for this purpose. The funds held by the safeguarding institutions shall be treated as bankruptcy remote, meaning they will remain insulated and protected in the event of any insolvency affecting Newrails. In circumstances that could jeopardise the stability mechanisms underpinning the EURW, the token holders shall be acknowledged as the rightful beneficiaries of the safeguarded assets.

   Within the confines of these safeguarding institutions, all fiat currency received from EURW holders in exchange for EURW issuance shall be segregated and maintained in a bankruptcy remote arrangement, ensuring that such funds are protected from any adverse financial proceedings against Newrails.

2. Transparency and Reporting

   Newrails will conduct regular audits of the reserves to ensure that they are fully compliant with regulatory requirements and that they accurately reflect the outstanding supply of Newrails Euro tokens. EURW will be issued and redeemed on public blockchains, ensuring transparency for both the tokens in circulation and the associated issuance and redemption transactions. The use of distributed ledger technology allows for open access to transaction records on the blockchain, providing market participants with democratized access to information and a consensus-driven process for transaction verification.

3. AML Measures and Transaction Monitoring

   As a licensed Electronic Money Institution (EMI), Newrails already complies with the E-Money Directive (2009/110/EC) and anti-money laundering regulations, specifically the Anti-Money Laundering Directive (AMLD). Newrails implements robust AML and KYC procedures, ensuring that all users of the EURW token are verified, reducing the risks associated with illicit activities such as money laundering and terrorist financing. This is critical as potential cross-border payments facilitated by EMTs, like the EURW, offer an attractive alternative to traditional payment systems, but also pose regulatory challenges that need to be mitigated. All fiat transactions are subject to ongoing transaction monitoring. EURW is built on the Hedera Hashgraph network. It has been designed to support AML and Transaction monitoring compliance via the following capabilities:

   1. Transaction Transparency and Auditability: Hedera operates on a public, permissioned ledger, where all transactions are recorded immutably and can be audited by regulators or third parties. Every transaction has a clear timestamp and a consensus-driven record, providing a transparent and verifiable trail. This enables easy auditing for compliance purposes and helps in tracking the flow of funds across the network.
   2. Compliance with FATF and Other Regulatory Guidelines: Hedera Hashgraph facilitates compliance with global AML standards, such as those outlined by the Financial Action Task Force (FATF). It supports the implementation of FATF's Travel Rule, ensuring that information on the origin and recipient of funds is shared appropriately in transactions that involve virtual assets.
   3. Tokenization and Controlled Asset Movement: Hedera enables tokenization of assets through its native Hedera Token Service (HTS), allowing organizations to issue tokens in a controlled manner. This service supports the enforcement of AML rules on token transfers. For example, whitelisting mechanisms can be applied to ensure that only KYC-compliant participants are allowed to hold or transfer certain assets, providing a layer of regulatory control.
   4. Customizable Smart Contracts for Compliance: Hedera supports smart contracts, which can be programmed to enforce specific AML or transaction monitoring rules. These smart contracts can restrict or flag transactions based on pre-defined criteria, such as high-risk jurisdictions, suspicious transaction volumes, or patterns indicative of money laundering activities.
   5. Data Privacy and Security: While Hedera provides transparency and auditability, it also allows for privacy in certain cases. It enables the encryption of sensitive information while ensuring that transactions can be verified without exposing private user data. This balance between transparency and privacy supports institutions' ability to comply with AML regulations while protecting user information.
   6. Real-Time Transaction Monitoring: Hedera's consensus algorithm allows for fast transaction finality, providing near real-time monitoring of transactions. This capability can be leveraged by Newrails to detect suspicious activity as it happens, reducing the risk of fraud or illicit activity within the system. Additionally, Newrails is using Sum and Substance Ltd., Eliptic and other software tools to provide integrated compliance, risk management and travel rule tools, to enable real-time risk scoring of EURW transactions and proactive wallet screening for sanctions and AML compliance.
4. Zero Cross-Currency Risk

   Funds received in exchange for EURW will be kept in Euro denominated liquid and highly liquid assets only in order to avoid and eliminate any cross-currency risks as per recital 70 of MICA.

Regulated Entity: Newrails UAB: newrails.xyz

Network: Hedera: LINK

Wallet Screening/AML: Elliptic: LINK

Travel Rule Compliance: Sum and Substance: LINK

Issuance of EURW EURW will initially be available to the public via the Newrails Platform and App. In order to access the Newrails Platform and App, it is necessary to create a Newrails account and follow the required steps for registration and successful customer onboarding. Euro fiat funds must then be deposited via wire transfer into the customer's Newrails account. While there are zero fees associated with the creation and redemption of the EURW, certain customer classifications may be subject to account fees for the operation of their Newrails account. Please refer to the Newrails website for pricing information. EURW tokens are issued, or minted, after Newrails receives and settles the user's Euro deposit. EURW is then minted to the user's Newrails wallet, with private keys securely stored in CloudHSM. As a regulated Electronic Money Institution, it is important to note that all funds deposited into the Newrails account are subject to safeguarding and are held in Euro liquid and highly liquid assets. Redemption At the core of Newrails's E-Money Token (EURW) model lies a robust redemption mechanism that ensures all token holders can redeem their tokens for Euro at any time, at a 1:1 par value. This system ensures that the Euro reserves backing the EURW are always accessible, allowing users to exchange their digital assets for fiat currency promptly and reliably. Redemption Rights EURW holders who wish to redeem their tokens directly with the issuer will be able to do so via the Newrails Platform. Redemption can be requested electronically at any time, and Newrails guarantees the 1:1 provision of fiat Euro funds equivalent to the number of tokens held. It is important to note that this guarantee is subject to holders that have successfully completed AML/KYC verification, wallet screening, and that have successfully onboarded to Newrails as an account holder. Fiat Euro funds will then be deposited into the holder's Newrails account. Tokens redeemed will be burned to maintain a balance between the tokens in circulation and the backing reserves. This ensures that the total supply of EURW always aligns with the liquid Euro reserves. To ensure the liquidity of the backing reserves, Newrails's reserve assets are held in liquid and highly liquid financial instruments. This means the reserves can be quickly accessed or liquidated to fulfill redemption requests under all market conditions, ensuring no delays or disruptions in user redemptions, even during periods of high demand. The Institution has the right to use multiple methods for protecting client funds, in line with EMI safeguarding obligations under the European regulatory framework. The Institution will employ the following best practices:

• A minimum of 30% of client funds will be held in a safeguarding account in cash, in Euros, with a reputable European regulated credit institution.
• A maximum of 70% of client funds will be invested into highly secure and liquid Euro government money market funds (MMFs); specifically, TO settlement money market funds to ensure accessibility and compliance with liquidity requirements under Basel III.

These measures ensure the safety, availability, and efficient management of client funds while aligning with regulatory standards and industry best practices.

Under MICA, the rights of holders of e-money tokens (EMTs) are designed to ensure fairness, transparency, and financial protection. The following is a description of these rights:

• Risk: Onboarding clients without proper Know Your Customer (KYC) and due diligence processes can allow individuals or entities involved in money laundering or terrorist financing to exploit Newrails.

• Examples:

• o False identities or stolen documents used during onboarding.
• o Onboarding clients from high-risk jurisdictions with weak AML/CTF regulations.

2. Transaction Monitoring Risks

• Risk: High transaction volumes and the speed of e-money transfers can make it difficult to detect and flag suspicious activities.

• Examples:

• o Structuring transactions to avoid detection thresholds.
• o Rapid movement of funds across jurisdictions or between accounts ("smurfing").
• o Use of e-money for layering in money laundering schemes.

3. Cross-Border Transactions

• Risk: Cross-border transactions increase exposure to jurisdictions with weak AML/CTF controls, raising the risk of funds being used for money laundering or terrorist financing.

• Examples:

• o Transfers to or from sanctioned countries or high-risk regions.
• o Transactions involving unregulated or under-regulated financial entities.

4. Use of Digital Assets

• Risk: If the EMI interacts with cryptocurrencies or stablecoins, there is heightened risk of anonymity and rapid transfer of funds, complicating transaction monitoring and risk assessment.

• Examples:

• o Mixing services or tumblers used to obscure transaction trails.
• o Integration with virtual asset service providers (VASPs) without robust AML frameworks.

5. Weak Safeguarding of Funds

• Risk: Failing to segregate client funds from operational funds can obscure the flow of money, creating opportunities for misuse or concealment of illicit activities.

• Examples:

• o Commingling of funds leading to loss of traceability.
• o Lack of transparency in the use of funds backing e-money.

6. Fraud and Identity Theft

• Risk: Fraudulent activity by clients or third parties can expose the EMI to reputational and operational risks.

• Examples:

• o Phishing or social engineering attacks enabling unauthorized transactions.
• o Use of stolen identities to open accounts and facilitate illegal transactions.
• o Al generated fakes

7. PEPs and Sanctioned Entities

• Risk: Politically Exposed Persons (PEPs) and sanctioned individuals/entities may attempt to misuse the EMI for illicit purposes.

• Examples:

• o Payments to or from individuals flagged in sanctions lists.
• o Lack of enhanced due diligence (EDD) for high-risk clients.

8 Regulatory Non-Compliance

• Risk: Failure to comply with AML/CTF regulations can lead to fines, penalties, and reputational damage.

• Examples:

• o Late or inaccurate filing of Suspicious Activity Reports (SARs).
• o Insufficient record-keeping for transactions and customer data.

9 Proliferation Financing and Terrorist Activities

• Risk: Funds moving through the EMI may be used for the proliferation of weapons or financing of terrorism.

• Examples:

• o Small, structured payments to terrorist organisations.
• o Transactions flagged for links to high-risk individuals or groups.

Newrails understands and has identified the potential for these risks to impact the business, and indeed these risks are inherent to any payments business. To mitigate these risks we take the following measures:

1. KYC and Onboarding: Implement robust customer due diligence (CDD) processes, with enhanced due diligence (EDD) for high-risk clients.
2. Transaction Monitoring: Deploy automated tools to detect and flag suspicious activities, with thresholds and rules aligned to business risks.
3. Cross-Border Risk Management: Screen transactions against sanctions and high-risk jurisdiction lists, using tools like OFAC and FATF guidelines.
4. Integration with VASPs: Ensure partnerships with VASPs meet AML/CTF compliance standards.
5. Regular Audits: Conduct internal and external audits of AML/CTF controls and procedures.
6. Employee Training: Provide ongoing AML/CTF training to staff, tailored to their roles and responsibilities.
7. Regulatory Reporting: Maintain accurate and timely SARs and comply with all relevant local and international AML/CTF reporting obligations.

Bankruptcy and Insolvency Identified Risks: Newrails recognizes that financial instability or insolvency could impact our ability to redeem EURW and force the closure of Newrails. Mitigation Strategies:

• Customer funds are safeguarded in segregated accounts with regulated custodians, ensuring full compliance with MiCA safeguarding provisions.
• Our internal capital adequacy ratio is monitored monthly to maintain a buffer above 1.2, exceeding regulatory minimums.
• Newrails has developed a comprehensive wind-down plan, which ensures that EMT holders can redeem their balances within specified timeframes, even in the unlikely event of insolvency. Sections D1 to D5 of this whitepaper contain more details as to our robust wind down plan in the event of insolvency.

Third Party Risks Identified Risks: Newrails relies on 3rd parties for certain outsourced functions and for the provision of safeguarding solutions. These outsourced functions and our decisions around safeguarding solutions are detailed in reports submitted to the BoL. Dependency on 3rd parties exposes Newrails to operational disruptions, compliance risks and potential regulatory non-conformance. Over-reliance on a single vendor may hinder business continuity in the event of a service failure. Mitigation Strategies:

Newrails conducts regular due diligence on its Third Parties and has established strong service level agreements with clear performance metrics to mitigate these risks.

People Identified Risks: The risk of operational errors, fraud, or reliance on key personnel without sufficient backup plans is a priority concern for Newrails as we scale. Mitigation Strategies:

• Newrails invests in regular training for employees, focusing on AML/CFT, blockchain compliance, and data security.
• We have developed a robust succession plan to ensure operational continuity in critical roles.
• Specialist hiring ensures that our team includes experienced professionals with deep relevant expertise.

Process Risks Identified Risks: Inefficient or outdated processes could lead to compliance breaches, delays in service delivery, or reduced customer satisfaction. Mitigation Strategies:

• Newrails conducts regular internal and external audits to evaluate and optimise our operational processes.
• All key processes, including AML/KYC checks and transaction monitoring, are documented as Standard Operating Procedures (SOPs) to ensure consistency and compliance.
• We maintain a feedback loop to continuously refine and improve our processes based on operational reviews and regulatory updates.

Technology Risks (also refer to Section F3) Identified Risks: Cybersecurity threats, hacking risks, and potential disruptions to blockchain infrastructure could threaten the stability and integrity of our operations. Mitigation Strategies:

• Newrails employs multi-layered security protocols, including encryption, multi-factor authentication, and regular penetration testing to safeguard our systems.
• Our blockchain infrastructure is powered by Hedera for its scalability and security, and we have established redundancy through alternative blockchain options to ensure uninterrupted operations.
• A dedicated incident response plan is in place to address cybersecurity threats promptly and effectively.

Facilities Risks Identified Risks: Disruptions to physical infrastructure, including offices or data centres, could compromise our operations. Mitigation Strategies:

• Newrails leverages cloud-based infrastructure with geographically redundant backups to minimise the impact of physical disruptions.
• Our facilities are secured with strict access controls and monitored to protect sensitive information and systems.

Data Protection Risks Identified Risks: Non-compliance with GDPR or data protection breaches could lead to fines, reputational damage, and loss of customer trust. Mitigation Strategies:

• Newrails ensures GDPR compliance through robust data management policies and practices.
• All customer data is encrypted both in transit and at rest, with regular security assessments conducted to identify vulnerabilities.
• A detailed data governance framework ensures accountability and adherence to regulatory requirements.

Tax Risks Identified Risks: Misalignment with local and international tax regulations could expose Newrails to financial penalties and reputational harm. Mitigation Strategies:

• Newrails engages experienced accounting and audit firms to navigate the complexities of tax compliance in all jurisdictions where we operate.
• Automated tax reporting systems are in place to ensure accurate and timely filings, reducing the risk of errors or oversights.

Liquidity Crises: Even though Newrails maintains a robust, 100% backed, reserve system, there is always a risk of liquidity crises during periods of high redemption demand or systemic market stress whereby Newrails's reserves could be stretched, leading to temporary delays in redemptions or a temporary suspension of token issuance. The issuer's responsibility under MiCA includes maintaining liquid reserves and ensuring that redemption rights are honoured under all circumstances, even during periods of market instability. Competition and Market Evolution: The market for EMTs and stablecoins is highly competitive, and new entrants or technological innovations could impact the adoption and usage of EURW. Newrails must continuously innovate and adapt to changing market conditions, including developments in blockchain technology and shifts in user preferences, to remain competitive. This risk is managed through ongoing market research, technology investments, and collaboration with leading players in the digital finance ecosystem Regulatory Risks: As a licensed Electronic Money Institution, Newrails operates within a strict regulatory framework. However, the evolving nature of regulations, especially in the context of MICA, can introduce significant risks. Changes in legal requirements, additional compliance burdens, or differences in interpretation of the law between jurisdictions may lead to increased costs, delayed approvals, or even restrictions on operations. As MiCA continues to shape the European market, Newrails must remain vigilant in adapting to any changes, which could potentially affect its ability to issue and manage its tokens. Reputational Risk: The trust placed in Newrails by businesses and consumers underpins the value of EURW. Negative events such as regulatory breaches, operational failures, or cybersecurity incidents could harm Newrails's reputation, resulting in a loss of consumer confidence and, consequently, demand for the token. Reputation management, alongside transparency in operations and regular third-party audits, will be critical in mitigating this risk. Operational and Technological Risks:

Running a secure and reliable digital asset operation is complex and subject to potential risks related to internal processes and external threats. Failures in internal control systems, such as payment processing errors or compliance oversights, could disrupt service and damage customer trust. Additionally, reliance on third-party services (e.g., banking partners for safeguarding reserves) introduces counterparty risks if those partners fail to meet their obligations. To address these, Newrails implements a robust internal control and auditing system, ensuring that all partners are regularly assessed for compliance with financial and operational standards.

• • Asynchronous Byzantine Fault Tolerance (aBFT): Hedera's consensus algorithm achieves aBFT, providing high resilience against malicious attacks by ensuring that the network can reach consensus even when some nodes act maliciously.
• • Smart Contract Security Model: Hedera's Smart Contract Service (HSCS) integrates native entity functionalities with an optimized Ethereum Virtual Machine (EVM). This integration ensures that smart contracts can only modify their own state and balance, preventing unauthorized access to other contracts' data.
• • Regular Security Audits: Hedera engages third-party security auditors to conduct comprehensive assessments of its network services and smart contracts. These audits identify potential vulnerabilities, allowing for proactive mitigation before any exploitation can occur.
• • Holistic Risk Mitigation with AML, CTF and KY Integration: Hedera's Stablecoin Studio integrates with a variety of leading 3rd screening and investigation solutions, enabling Newrails to monitor wallets and transactions for risks across multiple blockchains. This holistic approach enhances the detection and prevention of illicit activities.
• • Advanced Administrative Controls: Our platform and Hedera offers features such as burning, minting, freezing, wiping, and pausing of stablecoins. These controls allow issuers to respond swiftly to security incidents, minimizing potential damage from unauthorized activities.
• • Proof-of-Reserve Functionality: Hedera provides verifiable proof-of-reserve mechanisms, ensuring that issued stablecoins are fully backed by reserves. This transparency builds trust and reduces the risk of financial discrepancies.