The Exact Mechanics.

• Fees & Redemption
• Legal & Regulatory Positioning
• Infrastructure
• Governance
• Roadmap in Detail

Fees & Redemption, In Full

Two mechanisms keep ECO circulating locally instead of sitting idle or draining out of Livingston: a soft demurrage on balances that don't move, and a tiered fee on redeeming ECO back to GBP.

Demurrage

A soft 1.5% quarterly decay applies to idle balances — the exact threshold for what counts as "idle" (e.g. no incoming/outgoing transaction for a defined number of days) is still undefined. This is deliberately not stated as a hard number here until it is; the intent, not the exact trigger, is settled: encourage circulation, not penalise everyday balances.

Redemption fee — tiered, not flat

Redeeming ECO back to GBP costs a fee tiered by a merchant's cumulative monthly redemption volume, not a flat rate on every transaction:

• Up to £500/month1.5%
• £500–£2,000/month5%
• Above £2,000/month10%

This is calculated on cumulative monthly redemption per merchant, not per transaction — a per-transaction rule would let large redemptions dodge the fee by splitting into many small ones.

The tiers are marginal, like an income-tax bracket, not a cliff: each band only taxes the portion of volume within it. A merchant redeeming £2,001 in a month doesn't suddenly pay 10% on the whole amount — they pay 1.5% on the first £500, 5% on the next £1,500, and 10% only on the £1 above £2,000. Worked examples of the resulting blended rate:

The blended rate rises smoothly and asymptotically approaches but never exceeds 10%, even at very large volume — predictable enough for a business's own finance team to model, not an opaque calculation.

Buy-in discount

A merchant that buys ECO directly with GBP — funding the reserve — earns a discount on their own redemption tier, based on net position held: cumulative ECO bought minus cumulative ECO redeemed, calculated strictly within a trailing 12-month window, not as a permanent balance.

• £500+ net held (trailing 12mo): drop one fee tier (10% → 5%, or 5% → 1.5%)
• £2,000+ net held (trailing 12mo): floored at 1.5%, regardless of that month's redemption volume
• Never goes below the 1.5% floor — that floor funds the system's own infrastructure, it isn't discounted away entirely

The rolling window is deliberate anti-gaming design, not an oversight: a merchant who buys £2,000 once and never transacts again sees that purchase age out of the window over the following year and drifts back to the base tier automatically. A flat, permanent discount for a one-time buy-in was considered and rejected — it would reward a single deposit forever, regardless of whether the merchant keeps supporting the reserve.

Legal & Regulatory Positioning

Read this plainly, not as marketing: the positioning below is well-researched, cited against legislation.gov.uk, the FCA Handbook (PERG), and direct FCA guidance — but it is not yet confirmed by a solicitor. That review is a deliberate next step, not skipped. Nothing here should be read as settled legal fact until it is.

The Limited Network Exclusion (LNE)

The statutory basis is Schedule 1, Part 2, paragraph 2(k) of the Payment Services Regulations 2017 (PSRs 2017) for payment services, and Regulation 3(a) of the Electronic Money Regulations 2011 (EMRs 2011) for e-money. Three alternative qualifying tests exist under paragraph 2(k):

• 2(k)(i) — Premises-limited: usable only on the issuer's own physical or online premises.
• 2(k)(ii) — Limited network of service providers: usable only within a network of merchants that have direct commercial agreements with the issuer. This is the test EE's merchant-network model fits.
• 2(k)(iii) — Very limited goods/services: usable only for a narrowly defined scope of goods or services, regardless of geography or vendor count.

The FCA's real test is "limited way" in substance, not just form (PERG 15.5 Q40): even nominally fitting 2(k)(ii), the FCA assesses geographic footprint, merchant count, and network boundaries for whether the scope is genuinely restricted. This is part of why EE is deliberately limited to Livingston first — not just caution, but part of what keeps EE inside the exclusion at all. Qualifying for 2(k)(ii) also requires direct commercial agreements with each participating merchant, not just an informal sign-up — a real onboarding requirement, not optional paperwork. Pre-launch, at zero transaction volume, no FCA notification or registration is required at all.

The €1 million threshold

If gross aggregate transaction value across every LNE-reliant product EE operates exceeds €1 million in any rolling 12-month window (not a calendar year, and measured on gross transaction value — not net profit, fees, or unspent float), a formal notification duty is triggered:

• Submit via the FCA Connect portal within 28 calendar days of breaching the threshold, with a narrative of the scheme's design, sample merchant agreements, and the specific exclusion sub-paragraph relied on. A non-refundable fee applies.
• Annual re-notification is required every subsequent 12-month period while volume stays above the threshold — and a separate notification is required if volume later drops back below it.
• The FCA then assesses: if it agrees EE still qualifies, EE is added to the public Financial Services Register and continues under LNE with ongoing annual filing. If it finds the network isn't genuinely limited, it issues a negative determination.

Exceeding the threshold does not automatically end the exclusion or make EE illegal — it converts an unmonitored exclusion into an active FCA supervisory process. Continuing to operate after a negative determination without restructuring, seeking full authorisation, or appealing to the Upper Tribunal is a criminal offence under Regulation 138 of the PSRs 2017 / Regulation 63 of the EMRs 2011 — the real floor of why this matters, not abstract compliance box-ticking.

Because each new town's EE is planned as a fully independent legal and financial entity, this €1m clock runs per entity — Livingston approaching its own threshold has no bearing on any future town's clock, and vice versa.

Naming constraint

Bank of England guidance (followed by the Bristol Pound) requires local paper/digital currency schemes to be described as "vouchers" or "scrip," not "banknotes" or "legal tender." This is a real regulatory expectation, not a stylistic choice — worth a final pass before launch to confirm nothing on the site implies ECO is official currency.

Precedent: how Bristol Pound and Brixton Pound did this

Both schemes did not rely on LNE alone for their digital/e-money piece. They partnered with an existing FCA-regulated credit union (Bristol Credit Union; Lambeth Solon Credit Union) — digital balances and e-money were legally issued and held on the credit union's own regulatory books, sterling reserves sat in ring-fenced trust accounts there, and only the paper voucher side ran under pure LNE. This avoided the capital requirements and licensing cost of independently becoming a Small or Authorised E-Money Institution.

EE's current plan is a fully self-hosted digital ledger handling ECO balances directly — a materially different, likely harder and more expensive path than either precedent actually took. This is a genuinely open architectural question, not yet decided: pursue the harder independent path, or explore a credit-union/PI partnership for the digital wallet specifically? Bristol Pound ceased operations in 2023, after restructuring costs and funding constraints hit during its attempted transition from voucher scheme to full e-money platform — a real cautionary data point specifically about the digital-money layer, not a reason to avoid this model altogether (Bristol Pound ran working digital payments for over a decade before that transition).

How It's Built

EE runs on Inte.Team's own self-hosted infrastructure — a Dell PowerEdge R550 running Proxmox and Docker, not a rented cloud. A closed-loop currency running on a single physical host is a single point of failure once real value flows through it; offsite failover and automated snapshotting to a secondary location is treated as essential before go-live, not a nice-to-have.

• Tech stack: Laravel, React, Docker, PostgreSQL (with pgvector), ESP32 microcontrollers.
• Credit ledger API: a REST API workbook, e.g. /v1/credits/issue and /v1/credits/deduct, plus webhooks for merchants integrating their own POS.
• Merchant hardware: a hybrid model — dedicated low-cost ESP32 POS terminals (2-button "Pay"/"Earn", QR screen) for anchor merchants who want tactile, in-person legitimacy, alongside a React PWA for casual user-to-user transfers without dedicated hardware.
• Hardware telemetry ("Proof of Green Work"): ESP32-monitored wind turbine and Ni-Fe battery output logs directly to the ledger, auto-verifying the green-asset side of the 1:1 backing.

Legal Entity Structure

The governing body is not yet decided — this table replaces an earlier, vaguer "CIC / Registered Charity & Co-op Structure" framing with an actual decision-ready comparison of the options under Scottish law:

Whichever form Livingston picks becomes the template every future town's entity replicates — each new town's EE is planned as a fully independent legal and financial entity, not a branch of Livingston's, with its own registration, accounts, and liquidity reserve.

Roadmap, In Detail

The homepage roadmap gives the four-stage summary. The detail behind it:

• Stage 1 — Core Foundation. Legal shielding under the LNE (above); self-hosted Proxmox/Docker infrastructure; the ledger API workbook and ESP32 POS terminals; a public merchant directory so residents can browse which local businesses accept ECO.
• Stage 2 — Community & Educational Onboarding. West Lothian College and local high school STEM workshops; student-run device drop-off hubs; the Dojo training platform (component diagnostics, coding, eco-hardware assembly); B2B alignment with independent shops.
• Stage 3 — Closed-Loop Launch & Green Asset Backing. Asset-backed credit issuance tied to the Ni-Fe battery bank and wind wall turbine; automated telemetry-based credit minting; the fee/demurrage mechanics above, live.
• Stage 4 — Physical Hubs & Town Sharding, deliberately last. Physical "3H" Helping Hands Hub spaces; each new town gets its own fully independent legal and financial entity — not a branch of Livingston's, not sharing a balance sheet — replicating the model rather than one entity expanding across towns. Inte.Team is the common thread across all of them (support, infrastructure, brand), not the entity itself. This structurally resolves the €1m-threshold accumulation risk above by construction, but raises its own open items: team overhead scales per town (not just infrastructure), brand/quality consistency isn't legally separable between independent entities, and each town starts its liquidity reserve from zero.

Budget (explicitly unverified)

Itemised for a pilot targeting 20–30 local B2B merchants and 200 initial active users. These figures were AI-generated during early planning and are stated here exactly as flagged then: nothing confirmed, needs independent human verification before use in any grant application or merchant pitch.

Of that total, £5,000 stays as a cash reserve rather than being spent. Anything the founder personally contributes toward this — capital, hardware, chemicals — is structured as a loan to EE, repayable once EE can stand on its own, not equity or a donation.

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