How Does a Security Platform Work?
Securities tokens will need to comply with global securities laws. To do so, securities token offerings will need legal help, veteran blockchain developers and auditors, dependable Know Your Customer / Know Your Client (KYCC) providers, and a pool of investors that all have been through an Anti-Money Laundering (AML) process to demonstrate they meet the required criteria to invest.
KYCC and AML the are two main processes in the world of finance. Securities cannot be sold to someone without knowing who they are, their appetite for financial risk, and their source of funds. This helps to reduce the risk of any financial harm and ensures funds are not transacted with felon organizations
A working securities token platform works with a number of KYCC/AML services that will check the identity, residency, and accreditation status of every individual who wants to potentially invest in such a token. The investors reaction for financial loss should also be checked. By performing these checks, developers are assured that only authorized investors are able to transact with their security token.
A securities token platform would be comprised of a set of tools that helps people put all necessary aspects of regulations and blockchain technology together efficiently. It would create the framework for companies to issue their securities on the blockchain in an simple, up-to-date manner.
The platform would be a decentralized platform that has the potential to bring together these necessary parties to more effectively launch securities in terms of time, coordination, and costs.
While the SEC learns about the technological and economic landscape of initial coin offerings, its concerns may parallel those of the IPO frenzy of the early 1990s.
The recent decrees demonstrate to everyone that the government is actively looking to check and enforce in this space. A securities token platform with widely adopted standards and best practices could go a long way towards developing best practices for this new episode.By working with regulators to help create an acceptable standard, users will be able to more comfortably act and enforcement actions will be more clear.