Methodology Overview (Phase I)

What is DAREX?

DAREX™ (Digital Asset Regulatory Exposure Index) is a structured framework developed by RatEx42 to assess regulatory transition exposure and operational continuity sensitivity of digital asset market infrastructure entities.

DAREX evaluates how exposed an exchange, custodian, or crypto payment provider may be to evolving regulatory regimes such as:

• The EU Markets in Crypto-Assets Regulation (MiCA)

• UK financial services reforms

• National licensing transitions

• Supervisory filtration cycles

DAREX does not assess:

• Creditworthiness

• Solvency

• Financial strength

• Investment performance

• Probability of default

DAREX measures structural regulatory exposure — not financial health.

Why DAREX Exists

The digital asset sector is undergoing structural regulatory transformation. Recent developments across the EU and UK have shown that:

• Transitional regimes expire

• Licenses may be denied or suspended

• Supervisory enforcement may intensify

• Operational continuity may be affected

For merchants, professional traders, and counterparties, regulatory transition risk is a material factor in operational planning.

DAREX provides a structured way to assess that exposure.

Scope of Coverage (Phase I)

DAREX currently covers:

• Digital asset exchanges

• Digital asset custodians

• Crypto payment processors

• Fiat on-ramp and off-ramp providers

DAREX does not evaluate traditional banks, non-digital-asset payment institutions, or general financial intermediaries.

What DAREX Measures

DAREX evaluates structural exposure across several dimensions, including:

• Licensing and authorization status

• Jurisdictional regulatory environment

• Regulatory transition dependency

• Public supervisory or enforcement signals

• Corporate transparency

• Business model compatibility with regulatory trajectory

• Operational concentration risk

The framework is rule-based and supported by internal review procedures.

Tier Classification

DAREX assigns one of four classifications:

Tier A — Limited Regulatory Exposure
Entities with confirmed authorization and stable regulatory positioning.

Tier B — Moderate Regulatory Transition Exposure
Entities operating within a transitional framework but with structured compliance pathways.

Tier C — Heightened Regulatory Transition Sensitivity
Entities facing elevated uncertainty due to regulatory transition, jurisdictional fragility, or structural dependencies.

Tier D — Material Regulatory Transition Exposure
Entities exhibiting significant structural exposure due to regulatory events, licensing status, or operational vulnerability.

Tiers reflect structural regulatory exposure and operational continuity sensitivity — not financial viability.

Review & Governance

DAREX operates under a structured review framework:

• Periodic reassessment cycle

• Event-triggered reviews upon material regulatory developments

• Conservative upgrade approach requiring sustained confirmation

• Immediate reassessment upon significant regulatory action

• Internal review committee validation

All classifications are based on publicly available information.

Important Regulatory Clarification

DAREX does not constitute a credit rating activity within the meaning of Regulation (EC) No 1060/2009 on Credit Rating Agencies.

DAREX does not provide opinions on financial obligations, debt instruments, or probability of default.

Right of Response

Entities may submit updated public information or clarifications for review.

Reassessments are evidence-based and subject to internal governance procedures.

Versioning

DAREX is currently in Phase I covering digital asset market infrastructure.

Methodology updates, if any, will be version-controlled and documented.