Blockchain transferable equity instruments

Blockchain transferable equity instruments

Glossary

Blockchain: A decentralized, distributed ledger that records transactions between parties and is difficult to tamper with.

Cryptocurrency: A digital currency that uses cryptography to secure transactions and control the creation of new units.

Tokenized securities: Digital representations of traditional securities issued and traded on a blockchain.

Smart contracts: Self-executing contracts that automatically execute and execute on a blockchain.

Ethereum: A decentralized blockchain platform for running smart contracts and decentralized applications.

ERC20: A standard for creating tokens on the Ethereum blockchain.

Accredited investors: Investors who meet certain income or asset requirements defined by the U.S. Securities and Exchange Commission (SEC) to qualify to invest in certain securities that are not generally available to the public.

Private Placement Memorandum (PPM): A legal document provided to potential investors in a private placement that contains information about the offering, the securities, and the management team.

Escrow account: A third-party account that holds one party's funds during a transaction until the terms of the contract are met.

Proxy contract: A smart contract that allows one party to perform actions on the blockchain on behalf of another party.

Quiz

What are the main features of blockchain technology?

How do tokenized securities differ from traditional securities?

What is the role of smart contracts in tokenized securities issuance?

Explain the concept of accredited investors in tokenized securities issuance.

What is the purpose of a private placement memorandum (PPM)?

How do escrow accounts provide security in tokenized securities transactions?

How are proxy contracts used in tokenized securities issuance?

Describe some of the advantages of blockchain tokenized securities platforms.

Explain the importance of secondary markets for tokenized securities.

What regulatory aspects need to be considered in tokenized securities issuance?

Answers

The main features of blockchain technology are decentralization, transparency, security, and immutability. It allows for transparent and secure transactions between parties without the need for intermediaries.

Tokenized securities are digital representations of traditional securities that are issued and traded on the blockchain. They provide greater efficiency, transparency, and liquidity than traditional securities.

Smart contracts automatically execute the terms of a tokenized securities issuance. They define aspects such as issuance rules, investor qualifications, and distribution terms.

An accredited investor is a person or entity that meets certain financial requirements that allow them to invest in securities that are not generally available to the public. Tokenized securities issuances are often targeted to accredited investors to meet regulatory standards.

The PPM provides comprehensive information about the tokenized security offering, the issuing entity, and the associated risks. It acts as a disclosure document for potential investors.

An escrow account holds funds or securities between a buyer and seller until the terms of the transaction are met. This ensures that funds can be returned to the buyer if either party fails to meet its obligations.

An agent contract allows the issuing entity or its designated representative to perform actions on the blockchain on behalf of investors, such as token distribution or managing dividend payments.

The benefits of a blockchain tokenized securities platform include greater efficiency, reduced costs, greater transparency, and improved liquidity.

A secondary market allows investors to buy and sell tokenized securities after the initial offering. This provides liquidity and allows for a wider range of investor participation.

Tokenized securities offerings must comply with securities laws, anti-money laundering (AML) regulations, and know-your-customer (KYC) regulations. Compliance is critical to ensuring a fair and transparent market.