A lingering concern about Initial Coin Offerings (ICOs) is that we can’t always know whether they’re in compliance with securities laws or not. A new decentralized protocol called Polymath aims to tackle this problem.
The regulations governing securities tokens are murky and always evolving. Without adequate transparency or compliance with the standard “know your customer” (KYC) and Anti-money Laundering (AML) measures, ICOs risk losing our trust. Polymath facilitates that trust by making it much easier for asset-backed blockchain tokens to meet regulation requirements. According to founder and CEO Trevor Koverko, “We’ve created a new token standard that bakes requirements, such as KYC and AML, into the tokens themselves.” In this way, the regulatory aspects of developing new tokens are effectively handled by smart contracts.
Participants in Polymath’s closed-loop system include legal delegates, smart contract developers, token issuers, and investors, all of whom are incentivized by its native token POLY. As with most blockchains, Polymath’s transaction data is publicly available, and everyone benefits from this level of transparency. Companies can feel sure their tokens are compliant with regional, national, and international regulations, and we can all rest assured that we’re not bringing money into poorly lit alleys late at night.
This encourages entrepreneurs—who may have been resistant in the past—to invest in securities tokens and ultimately spur economic growth. “With the multi-trillion dollar securities industry coming to the blockchain,” says Koverko, “the Polymath platform allows individuals and companies to participate in the decentralized economy.” Jumio Corp echoes the sentiment that voluntary compliance has a positive effect on businesses: “It will better position their ICO, improve their credibility with banks and investors, expand their reach, and better protect their investors.” As ICOs gain a better reputation for compliance, they will be seen as more reliable investments.
Featured Image: Compliance by Alpha Stock Images, The Blue Diamond Gallery