Having raised more than $4 billion USD since 2013, the term ICO has come a long way in the cryptoverse as it has become rather common in the world, which goes beyond just the cryptocurrency community. However, on the flip side of the coin, the topic of securities tokens (STO) that provide equity or a claim to dividends from a company, have been fueling large discourses within the same community and has been tainted by rather negative connotations. Why you ask? It has everything to do with the regulations and tax burdens that accompany the STO, because security tokens, like any securities, are subject to government regulation.
The Security Case of Ripple Labs
The case of Ripple Labs, developers of the XRP token, serves as the perfect example. Ripple Labs was subjected to a class action lawsuit earlier this year in June, on the claim that they are, in fact a security and thus, by default have responsibilities to the people who had bought their XRP coins. Ripple defended its stance in court, sticking to the argument of the XRP not being a security coin.
So it is evident that a whole lot of groups and platforms would think it best to avoid the costs and rules and regulations that are imposed on being declared a security, altogether. Plus with ICO’s powerful potential to raise funds faster as compared to the traditional stock issuance, its no wonder that’s what the crypto platforms would like to stick to.
But what if there were a way to combine the best of both worlds? What if a company could do the whole ICO thing all the while being SEC-complaint? And that is where Polymath comes in, offering a service that helps in providing legal advices along with processes in order to help tokens being used as fully legally complaint securities.
The Polymath Token
Polymath has launched POLY, which is that native token of the platforms and is an ERC-20 standard token. It contributes in providing the basic framework of securities token for others to build on. Furthermore, only a maximum of 1 billion POLY are to be issued.
The Polymath Project
One of the more awesome things that the platform is planning on doing is creating a Security Coin Offering (STO), along with creating processes that would tokenize the securities market in a legal fashion.
In order to achieve these tasks, the Polymath platform is offering a wide assortment of services for those who wish to issue their very own security tokens, as well those whishing to purchase those STs.
However, amongst those services, Polymath itself will be offering only their blockchain, the POLY token, and the smart contracts required. These serve, as the platform’s primary developments, the rest of the functionalities that the users will directly be interacting with, will be outsourced to partners.
The KYC Process
The Know Your Customer (KYC) process is first of the outsourced functionalities and is of the utmost importance in the process of purchasing securities because of the regulatory compliances. The KYC process will be a requirement for any individual or institution that wants to be involved in the securities market. The SelfKey is responsible for the verification of the KYC. And the fees for this service will be only acceptable in POLY tokens.
Providing a Link with Developers
This is another rather interesting feature offered by Polymath, where by it connects those who wish to issue security tokens with developers who can achieve that task. This will prove very helpful to anyone or any institution that has an aim to develop a security token but lack the technical knowledge in terms of both, regulation and programming.
Foreseeing Potential Assets
The Polymath platform is home to the trading of securities and they can be anything from stocks and bonds to physical assets like real estate even. The cool part about Polymath is that it has the ability to foresee the next big thing with cryptocurrency amongst the assets, and in order to load the capital into the system; there will be the Polymath STO. Before this, the assets are not tokenized.
The Architecture of Polymath Securities Token Platform
The Polymath token platform comprises of three layers,
- An application layer
- A legal layer
- The Protocol Layer
All these layers function together in sync, to ensure the current and future compliancy of the token. By incorporating these layers into the platform, the team behind Polymath, aims to reduce the legal complexity and ambiguity that shadows securities; all the while minimizing the fees and improving the liquidity of the assets.
You can read the whitepaper here.
The Polymath Team