> For the complete documentation index, see [llms.txt](https://quantixfinance.gitbook.io/quantixfinance-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://quantixfinance.gitbook.io/quantixfinance-docs/protocol-overview/legal-and-on-chain-relationship.md).

# Legal and On-Chain Relationship

An on-chain position and a legal agreement are not the same instrument, and Quantix does not pretend otherwise. When a borrower draws capital, the obligation to repay is created by the Master Loan Agreement, a binding contract between the borrower and the lending entity. The on-chain transaction records and settles that obligation; it does not replace it.

This matters most at default. If a borrower fails to repay, recovery runs first through collateral and first-loss capital on-chain, and then, if needed, through the legal rights in the MLA — which may include cross-default provisions and claims against the borrowing entity. Legal recovery across borders is slower and less certain than on-chain liquidation, and the protocol says so plainly in its risk disclosures.

The lending entity is registered in the Gelephu Mindfulness City (GMC) Special Administrative Region of the Kingdom of Bhutan, under the GMC Companies Act 2025. Master Loan Agreements are governed by the laws of GMC, with financial services activity regulated by the Gelephu Financial Services Office (GFSO) under the GMC Financial Services Act 2025 — a framework built on Abu Dhabi Global Market (ADGM) financial regulation and Singapore-derived company law, both common-law systems. **GMC is a newly established jurisdiction (chartered 2024, core legislation enacted 2025); there is not yet a track record of financial-services disputes resolved or judgments enforced within GMC, and this should be disclosed as a genuine unknown rather than implied to carry the certainty of a more established jurisdiction.**